Business Law and Ethics: Course & School: School of Management Studies References: N.D.Kapoor

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Business Law and Ethics

Lecture by: Dr.K.R.Swaroop


Unit: 4,
Course & School: School of Management studies
References: N.D.Kapoor
UNIT 4
Business ethics
Unit 4

Business Ethics: Introduction, Definition, Ethics and


Business Ethics, Ethical Concepts, Ethical Values, Ethical
Corporate Behaviour, Ethical Dilemmas in Organization,
Ethics in the Functional Area, The Changing Environment:
Business Ethics-why does it matter, Levels of Business
Ethics-Five Myths about Business Ethics-can Business Ethics
be taught and trained? Stages of Moral development
Kohlberg’s study-carol Gilligan’s Theory-Principles of Ethics.
Importance of Ethics in Business.

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Ethics

Ethics or moral philosophy is a branch of philosophy that


involves systematizing, defending, and recommending
concepts of right and wrong conduct.
Principles of Ethics
The Principle of Respect for autonomy
The Principle of Beneficence
The Principle of nonmaleficence
The Principle of justice

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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 can
arise in a business environment. It applies to all aspects of
business conduct and is relevant to the conduct of
individuals and entire organizations. These ethics originate
from individuals, organizational statements or from the
legal system. These norms, values, ethical, and unethical
practices are the principles that guide a business. They help
those businesses maintain a better connection with their
stakeholders

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Importance of Ethics in
Business

1.Corresponds to Basic Human Needs


2. Credibility in the Public
3. Credibility with the Employees
4. Better Decision Making
5. Profitability
6. Protection of Society

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Ethical Values

In ethics, value denotes the degree of importance of some thing or


action, with the aim of determining what actions are best to do or what
way is best to live (normative ethics), or to describe the significance of
different actions.
Value systems are proscriptive and prescriptive beliefs; they affect
ethical behavior of a person or are the basis of their intentional
activities. Often primary values are strong and secondary values are
suitable for changes, What makes an action valuable may in turn
depend on the ethical values of the objects it increases, decreases or
alters.

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Ethical corporate Behavior

Corporate behaviour is the actions of a company or group


who are acting as a single body. It defines the company's
ethical strategies and describes the image of the company.
Corporate behaviour is important in strengthening
relationships within organisations between individuals,
teams, and in the organisation as a whole. It is important as
it reflects the values of the business and the extent to which
it is ethical.

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Ethical Dilemmas in Organization

An ethical dilemma is a moral situation in which a choice


has to be made between two equally undesirable
alternatives. Dilemmas may arise out of various sources of
behaviour or attitude, as for instance, it may arise out of
failure of personal character, conflict of personal values and
organizational goals, organizational goals versus social
values, etc.

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Functional Areas of Ethics in
Business

1.Production Ethic
• Adulteration
• Production of harmful products
• Inferior components and raw materials
• Lack of information to customers on side effects
• Unsafe and unhealthy packaging
• Ignoring environmental standards

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2. Marketing and Sales Ethics
• Unfair pricing strategy
• Creation of monopoly
•Dumping
•Non-disclosure of substantial risk
•Deceptive communication
•Poor after sales service
•Substantial advertisement
•Obscene advertisement
• Unhealthy competition
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3.Human Resource Management Ethics
• Low salary and wages
•Unsafe working condition
•Discrimination
•Child labour
•Employee raiding

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4. financial and Accounting Ethics
•Embezzlement of cash
•Window dressing
•Creation of secret reserves

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Changing Environment

Businesses & governments operate in changing


technological, legal, economic, social & political
environments with competing stakeholders & power claims.
Stakeholders are individuals, companies, groups & nations
that cause and respond to external issues, opportunities,
and threats.

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Business Ethics-why does it
matter

Ethics concern an individual’s moral judgements about right


and wrong. Decisions taken within an organisation may be
made by individuals or groups, but whoever makes them
will be influenced by the culture of the company.
The decision to behave ethically is a moral one; employees
must decide what they think is the right course of action.
This may involve rejecting the route that would lead to the
biggest short-term profit.

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Ethical behaviour and corporate social responsibility can bring
significant benefits to a business. For example, they may:
•Attract customers to the firm’s products, which means boosting
sales and profits
•Make employees want to stay with the business, reduce labour
turnover and therefore increase productivity
•Attract more employees wanting to work for the business,
reduce recruitment costs and enable the company to get the
most talented employees
•Attract investors and keep the company’s share price high,
thereby protecting the business from takeover.

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Environmental Forces and
Stakeholders
Local, national, and international environments are
increasingly moving toward and into a global
system of dynamically interrelated interactions
among local, national, and regional politics,
economies, regulations, technologies,
demographics, and international law.

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Levels of Business Ethics

Because ethical problems are not only an individual or


personal matter, it is helpful to see the different levels at
which issues originate and how they move to other levels.
Five levels are:
•Individual
•Organizational
•Association
•Societal
•International

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Five Myths About Business
Ethics

A myth is “a belief given uncritical acceptance by the


members of a group, especially in support of existing or
traditional practices and institutions.”
•Myth 1: Ethics is a personal, individual affair, not a public or
debatable matter
•Myth 2: Business and ethics do not mix
•Myth 3: Ethics in business is relative
•Myth 4: Good business means good ethics
•Myth 5: Information and computing are amoral

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Can Business Ethics Be
Taught And Trained
•Ethic courses and training can do the following:
•Provide people with rationales, ideas, and vocabulary
•Help people make sense of their environments
• Provide intellectual weapons
• Enable employees to act as alarm systems for company
•practices
• Enhance conscientiousness and sensitivity
•Enhance moral reflectiveness and strengthen moral courage
•Increase people's ability to become morally autonomous
•ethical dissenters
• Improve the firm’s moral climate

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Lawrence Kohlberg's stages of
moral development

Lawrence Kohlberg's stages of moral


development constitute an adaptation of a psychological
theory originally conceived by the Swiss psychologist Jean
Piaget. Kohlberg began work on this topic while a
psychology graduate student at the University of Chicago in
1958 and expanded upon the theory throughout his life.

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Kohlberg's six stages can be more generally grouped into three levels of two
stages each: pre-conventional, conventional and post-conventional.
Level 1 (Pre-Conventional)
1. Obedience and punishment orientation(How can I avoid punishment?)
2. Self-interest orientation(What's in it for me?)(Paying for a benefit)
Level 2 (Conventional)
3. Interpersonal accord and conformity(Social norms)(The good boy/girl
attitude)
4. Authority and social-order maintaining orientation(Law and order morality)
Level 3 (Post-Conventional)
5. Social contract orientation
6. Universal ethical principles(Principled conscience)

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Carol Gilligan Theory

Carol Gilligan born November 28, 1936) is an


American feminist, ethicist, and psychologist best known for
her work on ethical community and ethical relationships,
and certain subject-object problems in ethics.
According to Gilligan, there are two kinds of moral voices:
that of the masculine and the feminine. The masculine voice
is "logical and individualistic",[ meaning that the emphasis in
moral decisions is protecting the rights of people and
making sure justice is upheld.

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The feminine voice places more emphasis on protecting
interpersonal relationships and taking care of other people. This
voice focuses on the "care perspective,“ which means focusing on
the needs of the individual in order to make an ethical decision.
For Gilligan, Kohlberg's stages of moral development were
emphasizing the masculine voice, making it difficult to accurately
gauge a woman's moral development because of this incongruity
in voices. Gilligan argues that androgyny, or integrating the
masculine and the feminine, is the best way to realize one's
potential as a human. Gilligan's stages of female moral
development has been shown in business settings as an
explanation to the different ways men and women handle ethical
issues in the workplace as well.

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