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Business Ethics
PROF. INDRAJEET KOLE
 Syllabus
 Unit 1: Business Ethics: An Overview: What is Business Ethics? Principles of
Personal and Professional Ethics, Entrepreneur Vs Professional Managers, Values
and Ethics in Business, Changing Business Environment and Ethical Challenges.

 Unit 2: Ethical Dilemmas and Ethical Decision-making: What is Ethical

Dilemma? How to resolve Ethical Dilemmas? The process of making good ethical
decisions.

 Unit 3: Gandhian Philosophy of Wealth Management-Philosophy of

Trusteeship, Gandhiji’s Seven Greatest Social Sins.
 Syllabus
 Unit 4: Corporate Social Responsibility: Social Responsibility of
business with respect to different stakeholders, Arguments for and
against Social responsibility of business, Social Audit.
 Unit 5: Globalization and Business Ethics: International
Business issues, Key Global issues for Business, Ethics and Indian
Business, Whistle Blowing.
 Ethics-An Overview

 The word ‘ethics’ is derived from Latin word ‘Ethicus’

and the Greek word ‘ethikos’, meaning character or
manners.
 Ethics is thus said to be the science of moral, moral
principle and recognized rules of conduct.
 Nature of Ethics
 Ethics is a subject that deals with human being. Human by their nature are
capable of judging between right and wrong, good and bad behavior.
Thus, the question of ethics arises, as the human beings are associated with
values and morals.

 There was an argument whether ethics is a science or an art. But experts

were of the opinion that ethics is more a science than an art. Because it is a
systematic knowledge about moral behavior and conduct of human beings.
 Nature of Ethics

 Ethics is a normative science. The term normative

implies a guide or control or action; so, normative ethics
tells us what we have to do.
 Finally, ethics deals with human conduct that is
voluntary and force by any persons or circumstances.
 Business Ethics
 'Business Ethics' can be termed as a study of proper business policies and
practices regarding potentially controversial issues, such as corporate
governance, insider trading, bribery, discrimination, corporate social
responsibility. Businesses must abide by some basic principles. It should
provide quality goods and services at reasonable prices to their consumers. A
business must also perform other duties such as distributing fair wages,
providing good working conditions, not exploiting the workers, encouraging
competition, etc.
 Definition

 According to Crane, "Business ethics is the study of business

situations, activities, and decisions where issues of right and
wrong are addressed."
 Baumhart defines, "The ethics of business is the ethics of
responsibility. The business man must promise that he will not
harm knowingly."
 Principles of Personal Ethics

 Personal values are the conception of what an individual or a group

regards as desirable. Personal ethics refer to the application of these
values in everything one does. Personal ethics might also be called
morality, since they reflect general expectations of any person in any
society, acting in any capacity. These are the principles we try to
inculcate in our children, and expect of one another without needing to
articulate the expectation or formalize it in any way.
Principles of Personal Ethics

1) Concern and respect for the autonomy of others.

2) Honesty and the willingness to comply with the law.

3) Fairness and the ability not to take undue advantage of

others.

4) Benevolence and preventing harm to any creature

 Principles of Professional Ethics
1. Adhere to the highest standards of professional conduct
2. Strive for impartiality and objectivity when dealing with others
3. Communicate openly and honestly with colleagues and clientele
4. Maintain confidentiality in professional relationships
5. Fulfill commitments in a reliable, responsive and efficient manner
6. Be fully accountable for actions, use of resources and financial dealings
7. Avoid potential or apparent conflicts of interest
8. Show respect and understanding toward all people and honor diversity
9. Continue to upgrade professional competences to meet changing needs of families and
communities
 Entrepreneur Vs Professional Managers

BASIS FOR
ENTREPRENEUR MANAGER
COMPARISON

Entrepreneur refers to a person Manager is an individual who

who creates an enterprise, by takes the responsibility of
Meaning
taking financial risk in order to controlling and administering the
get profit. organization.

Focus Business startup Ongoing operations

Primary
Achievement Power
motivation

Approach to task Informal Formal

Entrepreneur Vs Professional Managers

BASIS FOR
ENTREPRENEUR MANAGER
COMPARISON

Status Owner Employee

Reward Profit Salary

Decision Making Intuitive Calculative

Driving force Creativity and Innovation Preserving status quo

Risk orientation Risk taker Risk averse

 Ethics and Values in Business

 Ethics and values are important in every aspect of life, when we have to make
a choice between two things, wherein ethics determine what is right, values
determine what is important.

 In the world of intense competition, every business entity work on certain

principles and beliefs which are nothing but the values. Likewise, ethics is
implemented in the organization to ensure the protection of the interest of
stakeholders like customers, suppliers, employees, society and government.
 Difference between Ethics and values
ETHICS VALUES

Value is defined as the principles and

Ethics refers to the guidelines for conduct,
ideals, which helps them in making the
that address question about morality.
judgment of what is more important.

In contrast to values, which is the stimuli

Ethics is a system of moral principles.
of our thinking.

Values strongly influence the emotional

Ethics compels to follow a particular
state of mind. Therefore it acts as a
course of action.
motivator.
 Difference between Ethics and values
ETHICS VALUES

whereas values are different for different

persons, i.e. what is important for one
Ethics are consistent
person, may not be important for another
person.

Ethics helps us in deciding what is morally Values tell us what we want to do or

correct or incorrect, in the given situation. achieve in our life

Ethics determines, to what extent our As opposed to values, which defines our
options are right or wrong. priorities for life.
 Business Values
 Values should be at the core of every business. They're what your business stands
for, your principles or philosophy, your reason for being. Your business's values
will help to steer your business, management and employees in the right
direction. 

Business values can be:

1. The principles you stand for personally – for example, integrity, perseverance,
determination, innovation, respect, passion and fair-mindedness
 Business Values

1. The beliefs and attitudes you and your staff have in common in
the workplace – how people should behave, the way managers
should act, how work should be done, how staff should treat each
other at work

2. Your organization's standards of behavior – what is acceptable

business practice. From a customer viewpoint, values are the kind of
service they can expect to get when they deal with your business.
 Business Ethics
Business ethics are a set of moral guidelines that influence how a company serves its
customers and treats its employees and is often based upon the personal ethics of the
company’s owner or manager. Every industry and individual business has its own
ethical conduct that affects its organizational procedures and systems.

1. Transparency : Transparency involves accurately representing facts, telling a truth

in its entirety and communicating clearly and openly about everything a company does
and says. It is the foundation of a strong relationship with customers, which directly
impacts the success and stability of a company.
 Business Ethics
2. Integrity : Sticking with a decision, especially when pressured to do otherwise,
shows honor and courage. Companies that do what they believe is morally right
based on equality and fairness can demonstrate strength and commendable character.

3. Trustworthiness : Companies that keep promises and fulfill commitments to their

employees, business partners and customers display their commitment to business
ethics. Trustworthiness is a monumental component to success in business because
people typically like to work with and buy from those they believe are dependable
and principled.
 Business Ethics
4. Loyalty : Loyalty encompasses all relationships a business has including those with staff,
partners, investors and consumers. Loyalty allows a business to make decisions benefiting
these relationships and overcome influences from outside conflicting interests. This shows
the business values the advancement of the company and employees over an owner's personal
gain.

5. Fairness : Companies should strive to act fairly and commit to exercising their power
justly. Leaders should only use honorable methods to gain an advantage over the competition.
Fairness and equality can be involved in hiring practices, marketing initiatives, business
partnerships and competing within the market for new consumers or clients.
 Business Ethics
6. Compassion : Ethical companies demonstrate genuine kindness, understanding and care
for the livelihood of others. In business, this means accomplishing business goals to produce
the most good while causing the least amount of damage. When a business decision needs to
be made, careful consideration of the options and how each one may affect a person or
community helps reduce the potential negative impacts, depending on the industry.

7. Respect : Having basic respect for the rights, privacy and dignity of people—including
individuals within and outside the company—is an important business ethical standard.
Companies that treat all humans with respect regardless of religion, sex, race, nationality or
other signifier are often reviewed positively in the public eye.
 Business Ethics
8. Lawfulness : Business ethics also include abiding by legal regulations and obligations
regarding their business activities like taxes, worker safety and employment and labor laws.
Companies that work within the boundaries of the legal system are more credible and
honorable, which can establish a strong positive reputation as an employer that encourages
high-quality candidates to apply for roles.

9. Providing excellence : Ethical organizations strive to provide excellence by always

working to deliver the greatest quality of service or products to their clients and customers.
They pursue creativity and innovation, looking for the best ways to deliver their goods and
seek to constantly improve their performance, customer satisfaction and employee morale.
 Business Ethics
10. Responsibility : Companies with high ethical standards recognize their
responsibilities to their employees and customers and understand how the conduct of
their leadership affects the business. Company leaders should implement ethical
standards and model them to others by displaying the standards themselves.

11. Accountability : Ethical businesses accept responsibility for all decisions made as a

company and admit their mistakes to all of those who may be affected by a misstep
including shareholders, employees and the public. In addition to taking accountability,
they also accept any consequences that result and do so transparently.
Changing Business Environment and Ethical Challenges

If you are to run an ethical business, you first need to know what types of issues you can expect to
face and may need to overcome.

1. Discrimination: One of the biggest ethical issues affecting the business world in 2021 is
discrimination. In the last few months, many corporations have come under fire for lacking a
diverse workforce, which is often down to discrimination. However, discrimination can occur at
businesses of all sizes. It applies to any action that causes an employee to receive unequal
treatment.

2. Harassment : The second major ethical issue businesses face is harassment, which is often
related to racism or sexism. This can come in the form of verbal abuse, sexual abuse, teasing,
bullying. Harassment can come from anyone in the company, as well as from customers.
 Changing Business Environment and Ethical Challenges

3. Unethical Accounting : Publicly-traded companies may engage in unethical

accounting to appear more profitable than they actually are. In other cases, an
accountant or bookkeeper may change records to skim off the top.

4. Health and Safety : Another type of ethical issue that is often protected by law
is health and safety. Companies may decide to cut corners to reduce costs or
perform tasks faster. As well as injuries, failing to take workers’ safety into
account can lead to psychosocial risks (like job insecurity or lack of autonomy),
which can cause work-related stress.
 Changing Business Environment and Ethical Challenges

5. Abuse of Leadership Authority: Abuse of power often manifests as harassment or

discrimination. However, those in a leadership role can also use their authority to
pressure employees to skip over some aspects of proper procedure to save time
(potentially putting the employee at risk), punish workers who are unable to meet
unreasonable goals, or ask for inappropriate favors.

6. Nepotism and Favoritism : Nepotism is when a company hires someone for being a
family member. Favoritism occurs when a manager treats an employee better than other
workers for personal reasons.
Changing Business Environment and Ethical Challenges

7. Privacy: Employees have recently found that the distinction between work life and
personal life has become less clear. This is mainly due to the advances in technology.
For one thing, employers may punish for posts on social media, particularly if they
complain about work conditions or the company as a whole. Employers may even fire
workers who post controversial statements that go against company values.

8. Corporate Espionage: The opposite to the above can also happen: workers can
misuse company data. An employee may steal intellectual property or provide a
competitor with information about a client. Usually, this is for monetary purposes, but
it can also help an employee secure a position at another firm.
Six Steps to Improve Business Ethics

1. Top management support

2. Expectations begin at the top
3. Ethics imbedded in training
4. Ethics office set up
5. External stakeholders informed
6. There must be enforcement