Business Ethics
Evolution of Thoughts
 First Phase License Quota Permit Raj(Independence- late 1960’s)
 Second Phase- Socialistic frenzy
(1970- mid 1980’s)
 Third Phase- Economic Reforms, 1991
Reasons for Evolution of BE
 Globalization and Decentralization of
business
 Growth of Media- Co. are being held
increasingly accountable for their ethical
conduct
 International Agreements and Actions- to
fight against corruption and bribery around the
world
Global Initiatives
 Global Sullivan Principles- Includes
Corporations, Higher Education and Civic
Involvement
 SA8000- created in 1997, by SAI and CEP is a
standard based on commitment to establishing
a cross country standard for workplace.
Focuses on Labor Rights.
 United Nations Global Compact- Kofi Annan (July
31,1999) at Davos, CSR, 9 principles- Human
Rights,Labour standards & Environment.
Caux Principles
 The Caux Round Table consisted of
group Of International Executives.
 Shared a belief that business
organizations can be powerful force
for +ve change
 Two basic ethical ideals: KYOSEI and
HUMAN DIGNITY
Kyosie and Human Dignity
KYOSEI- means “ living and working
together for the human good”
Human Dignity can be defined as “value
of each person as an end”
Shared values, including commitment to
shared prosperity are important to
global as well as communities of smaller
scale
Foundation for actions by Business
Leaders
 Principle 1: The Responsibilities of
Business: beyond Shareholders
towards Stakeholders
 Principle 2: The Economic and Social
Impact of Businesses: towards
innovation, justice and world
community
…cont
 Principle 3: Business Behavior:
beyond the letter of the Law towards
a spirit of Trust
 Principle 4: Respect for Rules
 Principle 5: Support for Multilateral
Trade
 Principle 6: Respect for Environment
 Principle 7: Avoidance of Illicit
Operations
ETHICS AND DECISION
MAKING
Ethical Dilemmas
 Significant value conflicts among differing
interests
 Real alternatives that are equally justifiable
 Significant consequences on "stakeholders”
in the situation
Approaches to Ethical Decision Making
 Utilitarian Criteria- Jeremy Benthham,1800.
preaches maximum good for maximum no. of
people as a result of an action.
 Rights Criteria- ‘Right to speech’ ‘Whistle
Blowers’
 Justice Criteria – in decisions for wages,
retrenchments
 Ethics of Care- should exercise care
Resolving Ethical dilemma

Recognize that there is a moral issue and define the
problem accordingly

Determine the actor who will be affected by the decision.
Also determine your role.

Analyze the facts how events happened. This will reduce
dilemmas to common patterns which are ultimately
manageable

Test for ‘Right versus Right’ paradigms such as Truth versus
Loyalty, self versus community, short term versus long
term, justice versus mercy.
Resolving Ethical dilemma
 Apply all three approaches to solving the dilemmas-(i)
utilitarianism i.e. do whatever produces greatest good
for the greatest number; (ii) rule based thinking i.e.
follow rules only; (iii) care based i.e. do what you
would like to be done to you.
 Investigate to find a third way out.
 Make decisions and take action.
 Revisit and reflect on the decision.
Characteristics
of
an
ethical
 Right – morally correct
 Equitable - Just and equal
 Good – Highest good for all concerned
 Proper – Appropriate and acceptable
 Fair – Honesty
 Just - Action
decision
Guiding factors for managers in ethical decision
making

A person’s personal code of ethics

The company’s formal policies, values and culture

The ethical climate in the industry

Government regulations. Morality transcends conformity to
law

Behaviour of management in the company

Deep belief to abide by the laws

Ethical conduct/Standards tend to rise due to greater public
exposure/image
Ethical Dilemmas at Workplace
(Donaldson)
 Recognizing conflicts of interest and avoiding
them
 Deciding if the business gift is just a gift or a
bribe
 Attaining fairness in employee performance
appraisals
 Initiating
employee
disciplinary
action
against
an
 Executing an order to take action against staff
Ethical Dilemmas at Workplace
(Donaldson)
 Managing a problem employee
 Handling reports of wrong doing on the job
 Safeguarding confidential information
 Recognizing and balancing the legitimate
interest of customers, employees, suppliers,
owners and the society in which they live
Sources of Ethical Dilemmas
 Face-to-Face Ethics
 Corporate Policy Ethics
 Functional Area Ethics
Difficulties
making
in
Ethical
decision
 Face dilemmas in deciding a course of action
 Confront a distinction between facts and
values
 Knowledge about the consequences of an
action is limited
 Antagonist
interests
frequently
use
incompatible ethical arguments to justify their
intentions
 Some ethical standards vary with the passage
of time
Difficulties in Ethical decision
making
 Competitive pressures
 Individual values in
organizational goals
conflict
 Cross cultural contradictions
with
Suggestions for Ethical decision
making
 Top management can improve behavior
 Code of Ethics
 Interaction
colleagues
with
 Control System
peers
and
other
Stakeholder Analysis for Ethical
Decision Making









Identification
Facts
Alternatives
Stakeholders
Impact
Guidance
Constraints
Comfort
Assessment
NASH’S TWELVE POINT PRESCRIPTION –
Resolving Ethical Dilemma
 Have you defined the problem accurately?
 How would you define the problem if you stood
on the other side of the fence?
 How did this situation occur in the first place?
 To whom and to what do you give your loyalty
as a person and as a member of the
corporation?
 What is your intention in making the decision?
 How does this intention compare with the
probable results?
NASH’S TWELVE POINT PRESCRIPTION –
Resolving Ethical Dilemma
 Whom could your decision or action injure?
 Can you discuss the problem with the affected
parties before you make your decision?
 Are you confident that your problem will be
valid over a long period of time, as it seems
now?
 Could you discuss without qualm your decision
or action with other?
 What is the symbolic potential of your action, if
understood? If misunderstood?
 Under what conditions would you allow
exceptions to your stand?
FRAMEWORK FOR ETHICAL
THINKING
 Do what is best for the greatest
number of people [consequencebased thinking]
 Follow
the
applicable
universal
principle, e.g. do not lie [duty-based
thinking]
 Do what a good [virtuous] person
would do [virtue based thinking].
Four Factors : Ethical Decisions
 The end- outcome sought
 The means –methods employed
 The motive
 Foreseeable consequences
Kohlberg’s Moral Development Theory
Punishment and Obedience orientation
Level 1
Pre-conventional
Stages
Instrument and Relativity Orientation
Interpersonal Concordance Orientation
Level 2
Conventional
Stages
Law and Order Orientation
Social Contract Orientation
Level 3
Post
Conventional
Stages
Universal Ethical Principles Orientation
Usefulness of Kohlberg’s theory
 Helps
us
understand
how
our
moral
capabilities develop
 Reveals how we can become increasingly
sophisticated and critical in our understanding
of moral standards we hold
 People generally progress through the stages
in the same sequence and not everyone
progresses through all the stages
 Implies that moral reasoning of people at later
stages of moral development are better than
their reasoning at earlier steps
Carol Gilligan Moral Development
Theory
 Pre-conventional level: Right conduct is
viewed in a selfish manner solely as what is
good for oneself
 Conventional level: Importance is on not
hurting others and willing to sacrifice one’s
own interest and help others. This is a
characteristic feature of women
 Post-Conventional level: At this level, balances
is found between caring about others and
pursuing own’s interest
Kohlberg vs. Gilligan
Kohlberg
Gilligan
A. Basic Aspects
Based on study on men
Based on study on men and women
Men give importance to moral rule
Women always wants to keep up
personal relationships with all the
persons involved in the situation
Ethics of rules and rights
Context oriented and ethics of care
B. Characteristic Features
Taking a commanding role
Shying away from decision making
Rigid
Human Oriented
Factual
Emotional
Independence
Dependence
Code of ethics
 Most common way of
ethics in the organization
institutionalizing
 Statements of the norms and beliefs which
form the ethical rules of the organization as
defined by the middle and top level
management
 Indicates “This is what we expect you to
behave”
Thank You