Unit 1.1: Introduction to Business Ethics PDF

Chapter- 1 Introduction to Business Ethics 1.1 An Understanding of Ethics In any organisation, from top management to employees at all levels, ethics is consider...

Chapter- 1 Introduction to Business Ethics 1.1 An Understanding of Ethics In any organisation, from top management to employees at all levels, ethics is considered as everybody's business. It is not just only performance, but also to conduct one achieving high levels of economic same of business's most important social challenges, ethically, at the ethical problems which arise in time simultaneously. What are the or what can be done about them are business and how to solve them explained in this module. Many of the vendors The problems in a business are multifold. of their goods. These the purchase offer kickbacks to the buyers, for bribes are many a times hefty and within a short period, the buyers make plenty of money. of Boston 'Moneylaundering' isanother example. In USA, the Bank and the Corporation shipped over $1 billion in cash to Swiss banks without reporting these transactions banks of other European nations failed to file the to US bank regulators. Twenty-one other banks also it is learnt transactions. After investigation, required forms for big cash such large cash flows officials suspected that that drug enforcement other gambling earnings, or illicit make possible cloak secret drug sales, and "cleaned.up" or "laundered" so as to gains that are hidden in banks laundering, Business appear the they were made honestly (Ref.:Money Week, March 18, 1985, pp.74-82). 1.2 Ethical Problems, What We Face in available, Ethical problems A number of ethical problems are beow: personal, humar: way as stated business can arise also in a very  2: Business Ethics (1) When orders dropped in any supervisor is asked to manufacturing terminate a few employees tO company, supervisor knows thatsome of save cost the have to be terminated them though loyal, hard to save his skin. He terminate the knows it working, is unfair th employees and still he is helpless. two months Even if he is termination time by the plans of termination to the company, he willl not given employees to be terminated with reveal his employees would quit while a fear that still needed or usually did after being not work as hard as the: told.The supervisor rules and policies. For had toenforce all him, the ethical company dimensions: dilemma relates to twe Personal Professional In another case,a (i1) senior librarian who negligent in his attitude, was very casual and had to make one of his scapegoat at the end of the weak assistants and nearly 500 books were year when library inventory was checked short. The senior that his assistant is highly librarian knew very well loyal, sincere and such a thing would not have honest in his work and of the books lost happened from him. However, the could not be found out reason blame on his unior whois by him and he had to put the mentally weak and had to take the full blame. He innocent. Otherwise, he took the decision of putting his junior rather than the blam on on himnself. There would be many for a number of reasons. episodes like this, raising ethical questions Sometimes society is harmed. At the individual makes other times, profit in an unfair way We all know the at the expense of story of the clever others. smeared it on to the face of the monkey that ate the curd rice and by his master who goat. The goat was punished severely thought that it had eatern the same. A business firn suffersmany is 'embezzled' or a times with higher costs when when the firm has mnoney to pay hidden costs for (Embezzlement is fraudulent its supplies. appropriation of another's person to whom it was entrusted). property by the Thus it can be noticed that 'money laundering' cloaks illegal activities and protects lawbreakers like monkey-goat episode. the 1.3 Meaning of Ethics Ethics in Latin language is called 'Ethicus' and in called Ethicos' In fact, this word has Greek, it is character or manners. originated from ethos',meaning Ethics is thus said to be the source of morals; a treatise on this: moral principles; recognised rules of conduct. Thecharacter of a man is expressed in terms of his Fig. 1.1). conduct (ref.  Introduction to Business Ethics :3 Leads to Good or Decided Taken Bad, by together Aight or Character Conduct Series of a Person considered Wrong, of a Man of Actions Moral or as Immoral Known as By which we Moral can Judge Requires Moral Judgement again Standards Fig. 1.1 Meaning of Ethics character of a person Ethics thus can be considered as the source of expressed as right or wrong conduct or action. 1.4 Definition of Ethics and Business Ethics We examine different will definitions given for ethics in the dictionaries as well as in books. is relating to According to Concise Oxford Dictionary, 'ethics' morals treating of moral questionsi morally correct; honourable. It is the study of morals and moral choices. It focuses on standards, Tülesand codes of conductthat govern-the behaviour ofindividuals and groups. In thesimplest terms, business ethics are moralofprinciples business. that define right and wrong behaviour in the world in business is What constitutes Tight and wrong behaviour and business determined by the public interest groups, personal morals and organistionS, as well as an individual's values. dictionary meaning of 'ethics' is that it is the The other of philosophy, which is 'science of morals'; it is that branch and conduct. It is a treatise concerned with hman character on morals (cápableof knowing right and wrong). that guides an individual Ethics'refer to the code of conduct to the social rules that while dealing in a situation. It relates dealing with theother people. influence people tobe honest in distinguish between Ethics are the principles of behaviour that ethics is the evaluation the right from the wrong. Business as right or wrong. Ethical of business activities and behaviour with what a group or society, as a whole conduct conforms considers right behaviour. of what makes up good and Ethics can be defined as the study actions and values. Business bad conduct inclusive of related of the study of Ethics and is defined ethics, which is a subject  4:Business Ethics bad conduct as what makes up good and asthe study of (Business is defined related to business activities and values as any a corporation, a partnership, individual or organisation, joint primary goalis to provide goods ventures or a franchise whose and services in order to obtain a return on investment) are the standards Ethics are the rules we play by. They are standar behaviour generally accepted by a society. Ethics conduct. Marketing ethics_ relate to a mora of moral principles evaluatton of decisions based on commonly accepted of behaviour. This evaluation results in action being judget right or wrong. Ethics pertain to more than what is legal. According toR.Wayne Mondy, 'Ethics is the discipline dealing with what is good and bad, or right and wrong, or with moral duty and obligation." Ethics is thatbranch of philosophy, which is concerned with the rightness or wrongness, goodness or badness of human conduct. Ethics provides the basis fordeciding that a particular action is morally good or bad. Ethics describes what is 'right'and what is 'wrong' in human behaviour, and what 'ought to be'. Business ethics are the desired norms of behaviour exclusively dealing with commercial transactions. Ethics is a description of 'observed' as well as 'desirablebehaviour' and 'conduct' that attempts to articulate moral values. Ethics concern the rightness orwrongness of human conduct. According to John Donaldson, Business ethics,in short can be described as the systematic study of moral (ethical) matters pertaining to business, industry or related activities, institutions,or practices and beliefs. It can also refer to the actual standards, values or practices or beliefs (An example of the latter use is Seen in the title of Max Weber's bok, The Protestant Ethic and theSpirit of Capitalism). Business Ethics is the systematic handling of values in business and industry. The word 'ethics'is derived from the Greek word 'ethos'which refers specificallyto the "character" and "sentiment of the community." Shea, in 1988 definesethics as the principles of conduct governing an individual or a profession and "standards of behaviour. Ethics are the 'rules or standards thatgovern behaviours.' As per Brian Harvey, 'ethics stands for a practice as well as a reflection on that practice. As a practice, it can be described as the conscious appeal to norms andvalues, to which, on reasonable grounds,we hold ourselves obliged, as, reciprocally. we hold others cbliged to the same norms andvalues. As a  Introduction to Business Ethics :5 ethics is the methodical and systematic elaboration reflectlon, of the norms and values, we appeal to in our daily activities. Ethics are about noms and values of a certain seriousness, about standards andideals,i.e., ones that people cannot easily at neglect without harming others, or without being looked disdainfully by significant others. It is about keeping your promises, respecting sentiment of beings, and distributing benefits and burdens in a fair and equitable way. Business ethics are the application of general ethical rules to business behaviour. According to Keith Davis and associates, ethics are a set of rules that define right and wrong conduct. These rules tell us when our behaviour is acceptable and when it is disapproved and considered to be wrong. Business ethics are the application of general ethical rules to business behaviour. Business ethics concentrate on moral standards as they apply to business policies, institutions and behaviour. It is a specialised study of moral right or wrong. It isa form of applied ethics. It includes not only the analysis of mnoral norms and of moral values, but also attempts to apply the conclusions theanalysis to that assortment of institutions, technologies, transactions, activities and pursuits that we call business. Business ethics are nothing but the application of ethics in business. It proves that businesses can be, and have been ethical and still make profits. Today, more and more interest practices in is being given to the application of ethical business dealings and the ethical implications of business. the Business ethics are rules of business conduct, by which relates proprietary of business activities may be judged. It also to the behaviour of managers. 1.5 Introduction to Business Ethics Ethics is commonly defined as a set of principles prescribing a and wrong. It behaviour code, explains what is good and right, or bad There is a combination may even outline moral duties and obligations. of two familiar words, namely business and ethics in Business ethics'. just as Business ethics are concerned with moral issues in business of medical practices and medical ethics are concerned with morality with the morality of political policies, or political ethics are concerned affairs. In business ethics, we arrive at two things: issues in Looking at the problems which raises moral business. for solving them. Critically examining the various problems  6:BusinessEthics Business Concerned with Ehics Moral Issues in Ethics Similar to Medical Ethics Concerned with Moralitý of Medical Practices and Policies or Political Concerned with Ethics Morality of Political Affairs Fig. 1.2 Understanding of Business Ethics By what method do right and we decide on answers wrong in to questions of business? There is no special or moral do this, nothing more unique process to orless than is into complex involved in any problems, whether in disciplined enquiry business or anywhere else. We can subject this to three differentkinds of tests. Test of agreement with the evidence: supportor deny the Does the evidence explanation we have put we are arguing for the forward? Example, in the running of benefits of greater worker participation companies, what is the employees actually want such evidence that Test ofinternal involvement? coherence: Are all the parts in agreement with each of the explanation other or is itself way? Does it say thingswhich contradictory in some so cannot be or are are somnehow in unlikely to be, equally opposition and time? true at the same Example: We cannot accept the interested in maximising workers who are exclusively of an enhanced wages and argue for the self esteem that importance to them would come fromn decision making. participation in Test of its compatibility (with our belief):Does it fit in with what more general this area or does we generally take to system be in it somehow true in at least test contradict our uncomfortably with them? assumnptions, or does the claim that the How well, for example, workers are exclusively maximising wages, fit in with interested in human motivation? what we generally accept about We attempt to solve ethical would solve any other problems in much the same complex and contentious way as we samerange of test available and questions. There is the the same kind of critical to theory. relationship  Introduction to Business Ethics :7 1.6 Ethical Performance Business frequently demonstrates a high level of ethical performance t00. Ethicalbusiness performance means adhering to society's basic rules that define right and wrong behaviour. The following examples reveal the same. (1) Johnson and Johnson protected its customers by recalling stocks of Tylenol capsules twice within 5 years period when poison was found in some Tylenol bottles on store shelves. (i1) Parker Brothers voluntarily withdrew its all time best selling toy when it found that two children were choked to death by swallowing some of its parts which they never anticipated. Even in India,HMT Ltd., a reputed public sector undertaking (i11) withdrew all its milk separators supplied through its dairy machinery unit, Aurangabad, when it found that one of the milk separators' lid atthe customers end flew off while running and hit the roof. No major accident took place. Owing to this, it withdrew all the separators supplied to the customers for re-checking and to make design changes for some time, so that the same should not be repeated. Later on, HMT replaced new separators to its customers. All this was done only to regain the customers confidence in them, by incurring heavy expenses. By doing jugglery like this, the companies have to spend millions of rupees or dollars on recalls/resupply etc. One of the major social challenges faced by business is to balance to be ethical and ethics and economics. Society wants business economically profitable at the same time. The three terms used to define ethics are: Right Proper Just and the question is "what is right,proper and just?" to the These are highly important termns in the future, compared the society is becoming more past, as our economy is more competitive, These terms and crowded and technology is becoming more complex. business executive who has to take questions are important for any his own control. - multi-decisions in ways that are beyond terms The ethics of management is coined with the above three and 'just' in the and the determination of what is 'right, "proper' - goes farbeyond simple decisions and actions that affect other people Collusion is a secret questions of bribery, theft and collusion. agreement to deceive.  8:Business Ethics 1.7 Ethics in Business All over the world, there is a growing realisation that important for any business and to achieve the progress of anyethicsis Ethics give rise to efficient economy. It is not the government Society. or which will protect the society. But ethics alone can protect it. lay are good in itself. Ethics and profits go together in the long Ethics ethically responsible company is one which has developed a run. A caring for people and culture ot environment, a culture which flows from the top managers and downwarda leaders. Ethics can be conscious appeal to normsand values to described as th we hold ourselves obliged,as which, on reasonable grounds same morms and values. As areciprocally, we hold others obliged to the reflection, ethics are the systemnatic elaboration of the methodical and norms and values we appeal to daily activities. Where in our these activities are organised issues, we face ethics in the under business practical and reflective ethics. variety of business On innumerable occasions, people in questions in which a balance has business are facing ethical to be found between often conflictingrights the differentand and interests of the parties even say that the involved. One may weighing of rights and determinate circumstances, interests, at stake in business ethics. constitutes the common domain of Ethical rules are guides to moral behaviour. For societies have ethical example: All rules forbidding, lying, harming others, similar to stealing,deceiving and the other ethical rules that honesty, keeping promises, approve of others. These are the helping others and respecting the basic rules of behaviour right of for the preservation and which are of much use continuation of organised life. Most of the people find major source of ethical guidance and meaning in religious beliefs and moral is equally important as it organisations. The family institution when they grow up, as schoolsaand imparts sernseof right and wrong in children cultural associations and other similar institutions like televisionetc. The totality will create in them a of these exposures concept of. ethics, morality and behaviour. sociallydesirable Ethical rules are present in all societies,all individuals, though they may vary organisations and all greatly from one to considered ethical by one another. What is society may be forbidden One particular religious notion by another society. of morality may ethics is a universal differ with others. human trait. AIl people wherever Still rules to gvern their they are, need conduct, rules thattell are right or wrong, moral or them whether their actions immoral, approved or disapproved. 1.8 The Common Domain of Business Ethics Majority of the business practitioners and ethicists alike good and clear competence in show a handling more dilemmas. Experience  Introduction to Business Ethics :9 and reflectionhave taught them how to spot the ethical implications of adiven situation and how to approach them in an orderly way. 'Moral noint of view' is to be adopted to track moral elements, adequately. This involves that one tries to determine the specificinterests and rights of all parties involved. Taking the moral point of view as the first moral decision, one makes in a process of forming a moral judgement. As an example, a young girl is suffering from neuro-blastom, the parties concerned are her parents, family doctor on one hand and the insurance company on the other. All insurance companies might have excluded from their policies willingly or inadvertently, cases facing lethal illness of clients, similar to the one of the young girl. If equity is the basic moral concept, one cannot accept a moral obligation in one case, andreject it in another that, in all relevant respects is similar to the first. The moral core issue is to be determined in addition to two or three possible core issues in a given situation. Once the core issue has been identified,however, it is another thing to come up with a well argued position to give good reasons, that is for a moral preference in the case. The real hard work of ethical analysis takes place with-the joint effort of the concerned (preferably) who are in a position to influence the decision and with some support of ethical expertise if required. 1.9 0bjectives of Ethics The objectives of ethics are as shown in figure 1.3 below: Study of human behaviour: Makes evalutative assessment about that as moral or immoral (adiagnostic goal) Establishes moral standards/norms of behaviour Makes judgement upon human behaviour based on these Ethical standards and norms Objectives Prescribes moral behaviour; makes recommendations about how to or how not to behave (therapeuticgoal) Expresses an opinion or attitude about human conduct in general. Fig. 1.3 Ethical Objectives good of man (1)The primary objective is to define the highest and set a standard for the same. Here we have to consider ethics to deal with several interrelated and complex problems which may be of psychological, legal, commercial, in nature. philosophical, sociological and political  10: Business Ethics (11) The other objectives are many. These are Study of human behaviour; making evaluative about them as moral or immoral (a diagnostic assessment goal) Establishing moral standards and norms of t behaviour. Making judgement upon human behaviour these standards/norms. based on Prescribing moral behaviour and making recommendation. about how to behave or vice versa (therapeutic goal). Expressing an opinion or attitude about human in general. conduct 1.10 Nature of Ethics The concept of ethics deals with human beings only. Only human beings are endorsed with the freedom of choice. The study of ethics has become a set of about moral behaviour and conduct; systematic knowledge study is a science - a field of social science. The science of ethics is a normative science. Normative sciences judge the value of the facts in terms of an idea: concerned with judgements of 'what ought to be,' but not with factual judgements. Ethics deals with human conduct which is voluntary and not forced or coerced by persons or circumstances. Eg. even killing a person who has Injuring or come to kill you is not considered a moral or legal offence, but a cold blooded murder is considered to be the highest kind of moral or legal Ethics is basically an area crime. dealing with moral judgement regarding voluntary human conduct. Business ethics is nothing, but the application of ethics in business. Business ethics can be, and has been, ethical and can still make profits. More interests shown today in the application of ethical practices in business dealings and the ethical implications. Profit maximisation and discharging of social responsibilities at the maximum limit cannot be done simultarteously as they are at opposite ends. (eg. concern for task i.e., and concern of workers). productivity By introducting advancedl technology to replace of ageold inhabitants occupations is an ethicaldilemma. decisions have ethical Many managerial implications and these decisions rise to managerial give dilermmas. The nature of ethics is shown in fig. 1.4 which is self explanatory.  Introduction to Business Ethics :1l Voluntary; not Deals with forced of beals with human beings only coerced by Concept, as they are en Human of Ethics persons or dowed with freedom Conduct circunstances. of choice and (example: means of free will. Injuring or a person who killing Human being can distinguish has come to kill you is not a Nature of between good and evil, right Ethics moral or legal offence; A cold and wrong, just and proper blooded murder the highest (4 Points) is Human being can distinguish kind of moral or legal crime) between the end he wishes to pursue and the means to gain Judge the values thatend. of the facts in terms Science Only human being does the of an ideal situation. of ethics question of ethics, values and Concerned not with (Normative moral conduct factual judgements $cience) but with judge set A of ments of what ought be' to Study of Syst e ma tic Ethics is concerned with júdgement Ethics knowledge about of value or what ought to be;seeks behaviour moral to determine the nature of the norm and conduct ideal or standrds and seeks to A science - a enquire into the fitness of human field of social science actions to this ideal Fig. 1.4 Nature of Ethics 1.11 Sources of Ethics No one takes a course to learn business ethics. Ethics is a natural market consequence of business as few ethics experts argue. Six primary sources of ethics have been identified in the American business area by ethics scholars George and John Stever as under: (1) GeneticInheritance In recent years, socio-biologists have lots of evidence and arguments to suggest that the evolutionary forces of natural selection influence the development of traits such as cooperation and alteration that lie at the core of our ethical systems. (i) Religion The great world religions as we have sen are: Judaism Christianity Islam The business people in these religions believe that their religion provides them with eth:cal principles/standards, which can be applied in business. The Jewish tradition and the Christian tradition refer are the religious ethical teaching as the Ten Commandments' which believed to have been divinely revealed as the will of God.  Ethics 12:Business VI. Codes of Conduct. Genetic Inheritance The qualities of goodness is traits Steiner and Steiner identified a product of genetic of over time by categories strengthened three primary codes the evolutinary process Company codes +II, Religion Company operating is clearly a Religious morality policies shaping our ethics Six primary focus in Codes of (through a Primary societal ethics the golden The legal system V. Sources rule exemplified by Law is an everchanging of Ethics rule and the ten approximation of current commandments) wrong. perception of right and II. Philosophical Systems Laws represen! a rough of society's The quality of pleasure to be approximation derived from an act was the ethical standards essential measure of its V. Cultural Experience goodness as per the John Steiner refers to the epicureans. The stoics like rules, customs and the puritans and many standards transmitted contemporary Americans from generation to advocated a discussed generation as guidelines hardwoking, thrifty life style. for appropriate conduct. Individual values are Such philosophies have been instrumental in our society's shaped in large measure by the norms of the moral development society. 1.5SixPrimary Sources of Ethics  18:Business Ethics 1.12 Six Primary sources of Ethics in the American Business are George and John Steiner, noted scholars have identified si primary sources of ethics in the American business arena. These ar already explained in fig. 1.14. Six Primary Sources of Ethics The Legal System Religion Genetic Inheritance Philosophical Systems Code of Conduct Cultural Experience Fig. 1.6 Sir Primary sources Ethics of Religion The religion is as explained in page 11-19. Via a rule exemplified by the Golden Rule (or its variations in many religions) and the Ten Commandments, religious morality is clearly a primary force in shaping our societal ethics The applicability of religious ethics to the is the concern business community The question the more relevant since the Golden is all is not limited Rule to western thought Could the Golden Rule srve as a universal, practical,helpful standard for the business persons conduct? Philosophical Systems To the Epicureans, the quality of an act was the essential measure pleasure to be derived from of its goodness. The stoics, like the puritans and many contemporary Americans advocated a disciplined, hardworking, thrifty life style.These philosophers like other philosophers, have been instrumental in our society'smoral development The Legal Systen Laws representa rough approximation of society's ethical standards. Thus, the law serves to educate abcut the ethical  Introduction to Business Ethics 19: causes in life. The law should not be treated as a vehicle for expressing all of society's ethical preference Codes ofConduct Steiner and Steiner identified three primary categories of such codes: Company codes,ordinarily brief and highly generalised express broad expectations about its conduct. Company operating policies often contain an ethical dimension.Express policies as to gifts, customer complaints, hiring and other decisions serve as a guide to conduct and as a shield by which the employeecan protect against unethical advances from thcse outside the firm. Affirmative ethical principles ofthe American Institute of Certified Public Accountants:Many professional and Industry Associations have developed codes of ethics as above.Codes of conduct seem to be a growing expression of the business community'ssincere concern about ethics. However the utility of such codes remains unsettled. GeneticInheritance As already said in page 11,Socio-biologists in the modern age have amassed persuasive evidence and arguments suggested the evolutionary forces of natural selection influence the development of traits such as cooperation and altruism that lie in the core of our ethical systems. Those qualities of goodness often associated with ethical conduct may in some measure be a product of genetic traits strengthened over time by evolutionary process. Cultural Experience Steiners referto the rules, customs and standardstransmitted from generation togeneration as guide lines for appropriate conduct.Individual values are shaped in large measure by the norms of the society. Some of the experts in business ethics have statedthe following (0Business Operates within the Society: It is a part of subsystem of society. Business's functioning must contribute to the welfare of the society. In order to survive, develop and excel, business must earn social sanction of the society where it exists and functions. Without earning social sanctions, business cannot get loyal customers, cannot operate in the market place. It will soon collapse and die away. Business If business grows larger. the public takes more interest in it, since this will lead to a impact on the greater Society community. Managers are tuned to publíc opinion and they react toit. They seek to maintain a proper image of their Fig.1.1IBusiness is a company in the public mind. This leads to the assumption of greater Subset ofSociety responsibilities.  28 : Business Ethics (i) Eery business irrespective of size exists more means or in on ethico to tal regard to its social concern to surui long: Otherwise, resorting to unethical behaviour or nos concerning with social welfare, it will call for its own doom Thus, business should be ethical and socially responsible. As a statement of purpose, maximising of profit is not only unsatisfying. it is not even accurate. Business needs to remain ethical for its ewn good. Unethical actions and taking decisions will shorten the life of the business like a flash in the pan. quickly growing and even more quickly dying and forgotten. (iii) Business needs to function as responsible corporate citizens in the country: It is that organ of the society which creates wealth for the country.Hence, narrow mentality and narrower goals and motives are to be avoided. 1.18 Importanceof Business Ethics Business ethics has already been defined earlier. However, (it is the application of general ethical rules to business behaviour. It is not a special set of ethical rules different from ethics in general and applicable only to business. For example: If asocity's ethicalrule says that dishonesty is unethical and immoral, then who is dishonest with employees, customers, anyone in business, creditors, stockholders or competitors is acting unethically and immorally. Similarly, if protecting people from harm is considered ethical, then business firm that recall a defective and dangerous product is acting in an ethical way. In most cases, the general public expects business to exhibit high levels of ethical performance and social responsibility.Business firms and their employees are encouraged to act ethically is to prevent harm to society."Do no harm" is one of the strongest ethical principles. Next is to protectbusiness firms from abuse by and kickback schemes have become very unethical competitors. Bribery common and penalise honest business firms. High ethical performance protects the individual who work in business. Businesses that treat their employees with dignity and reap many rewards in the integrity form of high morale and improved productivity.People feel good about working in an ethicalcompany since they are protected along with the general public. In spite of the positive benefits of good ethical problems occur for the following practices, ethical reasons: Personal gain/dubious character Individual values widely differ with organisational goals Managers values and attitudes Competitive pressures Cross-cultural contradictions  Introduction to Business Ethics :29 gain ()Personal whose personal Business who employs people sometimes wrongly People are less than desirable. This will cause ethical problems. of all values ahead be sometimes greedy, and put down their own welfare the of the fellow employees, will not bothered about the welfare others, to anticipate or society. Since ethical qualities are difficult the company at the time of recruiting employees, many people of measure and to weedout ethically willcreep in, though an effort above mentioned type account made. The embezzler, the expense undesirable applicants are in. Since perfect leaver and the bribetaker slip naddler,the chronic sick eliminate this system is lacking, business is not likely to screening proceed carefully entirely. Business has to kind of unethical behaviour trample individual rights taking care not to in screening applicants, to popular unethical employees. Contrary in the search for potentially reason why unethical is not the most important opinion, personal gain in business. practices occur a company in Bangalore, with the One of the marketing officers of gain is making lot of money apart of personal above mentioned qualities The proprietor of the company knows and highest salary. from his what is going on. pretending as though he does not know tolerates this, is very good in his being, is that this marketing officer The reason issues. the proprietor on critical work and support many a times a vis organisational goals vis Individual values are not uses methods that (i1) pursues goals or A company if it its employees will create ethical conflicts in - of acceptable to some 'goes blowing' would be the outcome if an employee the business. 'Whistle to convince which results after he fails public' with a complaint to correct the alleged abuse. an company companies in India, tool manufacturing in In one of the machine and vast experience good qualifications under one of abroad had officer posted suddenly and asked to work foreigncountries was recalled The methods, who was not much qualified. of the company not accepted the directors in the department by the director was many followed even though procedures, there used to be heated arguments these were in by the officer and with his experience. All were made the officer and made the good suggestions so furious about was vain and the director responsibility assigned an isolated place without any own. officer to work in to resign on his the officer was forced to him. Eventually, in these the above, the protesting employees to correct from As could be seen trouble makers. Instead, they wanted Companies were not company's goals, procedures. They felt that the the internal company harm everyone employers were following would public. On methods etc. which and the general as well as customers are right and the Including themselves helm felt that they at the This was a ethical le contrary, the people are wrong and unethical. Protesting employees  30 : Business Ethics Alemma. The protesters or the employees who do notlike pracuccs Blow whistle'by revealing the situation to the the compa () Managers values and attitudes general pu As decision makers, managers have more others to set an ethicaltone for the company. Theyopportunities are the t to act ethically or key pe unethically.Ethical guidance by the top levels to the usually will be employees down below. The values provic top managers are important in held promoting ethical activities. Managers ask three key questions when making a decision: Willit work? (Pragmatic approach) Major orientations of managers from decision maki five nations referred pragmatic approach and ethical approach contributes major approaches. Is it right? (Ethical approach) Is it pleasant? (Affective approach) Values most likely to influence managers at work are: Service to customers Ability Company loyalty Achievement Organisational efficiency High productivity A 1982 report on a group of over 1400 values are important as corporation executives rated under: Responsibilityand honesty 88% Capable 66% Imaginative 55% Logical 49% Ambitions 37% The above value preferences are due to the companies have on the managers. Another influence of theif reason is the responsibilitythat managers feel professional concerning their jobs. Organisational theorganisation is toeffectiveness is their centralgoal while at be made effective, good work. Then other goals are: management is requireu Organisational efficiency C Organisation reputation High morale W Organtsatíonal leadership High productivity  Introduction to Business Ethics:31 Similarly. Organisational growth Organisational stability Profit maximisation - also would follow Lastly. Organisational value to community Service to public - are also necessary The factors which might cause the managers to make unethical (January decisions as per an article in Harvard Business Review, February 1997, p.66)are as under: Behaviour of the supervisors in the company is most important. Followed by this are: Behaviours of one's equals in company Industry's ethical climate Society's moral climate Formal company policy (orlack there of) Personal financial need attitudes of These research findings show that the values and ethical performance. managers are a critical element in a company's (iv) Competitive pressures When companies compete for a similar product, they sometimes a competitor from engage in unethical activities in order to wipe out for advancement can motivate the market. Rivalry between employees some kind of unethical behaviour. In one of the cases, a private company, was there fromn a long time had a very good collaborator making certain machinery. This company those products. The design of the from Europe to back up them for customers. The and liked by its product was good, products were light had enjoyed nearly 50years solid private company after collaboration the products with less foot holding and doing very well by marketing with high prices for their products. competition and making high profits good and it was well However, the performance of the products were long time and they could sustain established in the market since a even without business for certain years. A well established public sector the government to take up the at the same time was forced by and tocompete manufacture of similar products of the private company with them. with the private The public sector company could not compete company for the following reasons: with a firm abroad of less repute Publicsector company collaborated of that company which was not popular in the market. The products  32 : Business Ethics not so good. Added to this, was robust. performance wise very adequate back up support was not there. Further. the private company ha amassed high profits every v They were able to and monopolised more or less from a long time. products of their down to any price and compete. The price when competition developed was always kept 10% lesser than public secto and was supplying better products to customers. The public sector could not compete due to its high overheade high collaboration fees,uncompetitable products, poor backup service from collaborator,high cost of machinery installed,high salary of people etc. Further, the private sector was able to secure orders through not discounts, presentations, gifts, etc.,which the public sector could afford to do it. The main intention of private sector was to wipe out the public sector andit succeeded to the major extent and is sitting pretty even today making the public sector, almost in the verge of closing. (v)Cross-cultural contradictions Ethical problems occur when certain corporations cannot do business at home, would try to enter other societies where ethical standards differ. At home, if it is difficult to follow the ethical standards, then such unsafe products (their countries doesn't permit) are sold where and there is demand in other countries and where ethical standards permit to use such products. Acceptable safety standards differ among nations and that honest differences of opinion exist among scientists and safety experts. There are some companies who have built factoriesin nations whose pollution control laws are less stringent than a particularcountry regulations.They are charged with "exporting pollution". What is thought to be ethically acceptable by one nation is considered unethical by another. The resultant ethical dilemmas can be difficult ones for business firms and their managers to solve. Four groups to which business has a responsibility. Companies have a responsibilityto: Society Employees Customers (Consumers) Investors  Introduction to Business Ethics :33 (Open apparent) to view, public Considered reprehensible Majority deplore this and most Overt Ethical businesses takecare not to be so c Probiems openly unethical E.g., bribery, theft, sabotage, Ethical collusion, etc Questions (Covered,concealed or secret) Most complex, not transpare generaly defyethical solutions Covert Ethical e.g., corporate acquisitions, Problems marketing and personpel policies, capital investment etc. Difficult to locate, to eliminate More dangerousand threatening to business Fig. 1.12 EthicalQuestions  : 40 Business Ethics all such about mishappening, us than before reminding is more loudly than before. to listen more and we began Ethical Responsibility 1.21 Business and responsibility to becom Business has an ethical mn, As many agree with social concerns. Business in dealing ratherthan being a more active partner a,part of solutions, creatively find ways to become fro should not isolate themselves Corporations it up to part of problems. problems, leaving solving our environmental participation in to do. There are the answers and to tell them what not others to find such leadership, even when this of corporations dèmonstrating business example Though Bowie admits that has been a risk to their selfinterest. the public and promote environmentally has a responsibilityto educate moral is to be understood that corporate. responsible behaviour, it educational campaigns, needing moral leadership goes farbeyond public risk and sacrifice.Business is capable vision, commitment and courage, of such a challenge. Business ethics movement should do nothing short of encouraging such leadership demanded by morality. When Good ethics may be good business in majority of the cases. interests, any thecrunch comes, when ethics conflicts with the firm's isdoomed ethics program that has not already faced up to this possibility of the program itself. In to fail because it will undercut the rationale business, as in all other human endeavours, we must be prepared to pay the costs of ethical behaviour. So also in the environmental movement, a similar danger occurs with corporations choosing or being wooed to be environmentally friendly on the grounds that it will be in their selfinterest.There is the risk of participating in the movement for the wrong reasons. The frequent strategy of the hew environmentalists is a business to help solve environmental problems by finding pure or virtually costless ways for them to participate. They feel that compromise, not confrontation, is the only way to save the earth. Á.22 Scope of Business Ethics Ethical.issues exist at all levels of business activity. Business ethics concern the ground rules of individual behaviour. company and societal See figure 1.17 on the next page. 1.23 Objectives of BusinessEthics As per Peter Pratley, Business ethics has a two fold objective: Evaluates human practicesby calling upon moral standards Gives prescriptive advice on how to act morally in a specific kind of situation.  Introduction to Business Ethics :41 Personal policy level Not to use office car, stationery and other (Stakeholders level facilities for personal us Not to fall prey to short ends. Employees Not to misuse others for personal Security of job Not to indulge in politics to gain power Better working conditions Not to spoil promotional Better recommendation chances to others Societal Level Participative management Promise keeping Welfare facilities Mutual help Customers Better quality of goods Concern for poor and Goods and services at downtrodden price Scopeof reasonable No discrimination against any Business Ethics Not to corner stocks and create particular section or group securities Concern for clean environment Not to practice discriminatory Preservation of scarce pricing resources for pOsterity Not to make false claims about products Contributing to better quality of life inadvertisements Shareholders Ensure capital appreciation Internal Policy Level) Ensure steady and regular dividends Disclose all relevant information shareholder's interests Fair practices relating to Protect minority Not to window dress ba!ance sheets requirement, compensation, etc. Protect interests in times of mergers, layoffs, perks, promotion Transformational leadership to amalgamations and takeovers Banks and other lending institutions motivate employees to aim at better and higher things in life Guarantee safety of borrowed funds Better communication at levels Prompt repayment of loans Government Complying with rules and regulations dues Honesty in paying taxes and other of the country Acting as partner in the progress  Transition Stage Dynamic relationship and Caring for self and between self Three One ensuring survival others focus as (sell unacceptabl selfish) Focus Two Responsibility and material carefor dependent others (Questions illogic of inequality between needs of others and self) Fig. 1.23 Conception Moraldevelopment asper Carol Gilligan of "In a Different Voice (Cambridge: Harvard University Press, 1982 1.29 Functionsof Ethics The functions of ethics are as shown below: is an area regarding Ethics Moral Voluntary Human dealing with Judgenent Conduct Sets the judge to standard requires Moral Related to Moral Standards Obligations Ultimate end or The duty to do The highest what we good consider to be 'right' and 'proper' Fig. 1.24 Functions ofEthics 1.30 Criteria for Universalisability Universalisability is the doctrine or belief of universal salvation, tr ultimate salvation ofmankind. Whateverbe the context and if it is involvi prioritising generally accepted standard ethical do anything that we would not like to be done toprinciples, we should no us in similar situation This is the criterion of universalisability as stated by Kant in 1985. Th ds applicable evenwhatever be the context and even if it if involve prioritising generally accepted standard principles. It may be noted that: code of behaviour can be universally applied, if it is considered ethical! correct. This can be treated as a general principle in enabling to evalua other values and providing a balance when there is a conflict of value A.31 Characteristics of Business Ethics decisions differ with the individual perspective of Ethical Each person views the ethical question in different persons. terms of his/her own frame of reference. to themselves, but affects a are not limited Ethical decisions decisions do as well. Ethical wide range of other situations have widespread ramifications. not end in themselves, but involves a trade-off- between costs Most ethical decision received. It needs to be clearly incurred and benefits and benefits, profits and responsíbilities understood that costs spectrum. are two ends ofa single  48 : Business Ethics decisions are not clear and Theconsequences of most ehtical clear what th: nature. It is not often are amnbiguous in will be of an unethical decision, either of a consequences individual or of an organisation Every person is individuallyresponsible for the ethical o unethical decision or action that he or she takes. Ethical decisions are voluntary human actions. All huma beings have the freedom of choice and of free will.