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Business Ethics
This session will discuss:
What is Ethical Science?
Basic sources of ethical values.
How corporations manage ethics and try to
elevate behavior?
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What is Ethical Science?
Ethics is the science of conduct or
sadaachaara
Ethics is the study of what is right or
good in conduct
Ethical science shows the way in which
human beings behave towards each
other as well as towards other creatures
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Ethical Science (contd)
Ethics is a relative science- what is good
for one, may not be good for another.
Even, what is good at one time may not
be good at another time and at anotherplace. Ethics is relative to the man
himself and to his surroundings.
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Ethical Science (contd)
Practice of ethics will help you to live in
harmony with your neighbours, friends,
family, society and with the environment.
It will keep your conscience clean.
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Ethical Science (contd)
One must have bhava-suddhi or
purification of the motive. Act done with
pure motive only will be conducive to
morality. There must be an internalsankalpa or resolution or attitude of will,
to be free from an impure feelings.
Do as you would be done by
do untoothers, as you wish others do unto you
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Character
Character is the essence of a person.
The sum total of her/his virtues or traits
forms her/his character.
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Conduct
Conduct is personal behaviours or
deportment. Character expresses itself
as conduct. Conducts reveals the
character of the man. It moulds thecharacter also. Conduct is the outer
expression of character. Character is
expressed in conduct. They act uponeach other. Character is the inner side
of conduct.
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Behavior
Behavior is the conduct of the person
upon particular occasions. It is the day-
to-day conduct of men/women, at work
at any given time, play, alone, incompany, at home/hostel/school, office
or outside etc. The external behavior is
not always a sure guide in judging onescharacter. In fact humans are very
complex and mysterious beings and
very difficult to predict.
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What are Business Ethics?
Business ethics is the study of good and evil, right andwrong, and just and unjust actions in business.
Although all managers face difficult ethical conflicts,applying clear guidelines resolves the vast majority ofthem.
Ethical traditions that apply to business support truth telling,honesty, protection of life, respect for rights, fairness, andobedience to law.
Eliminating unethical behavior may be difficult, but knowingthe rightness or wrongness of actions is usually easy.
Some ethical decisions are troublesome because althoughbasic ethical standards apply, conflicts between them defyresolution.
Some ethical issues are hidden and hard to recognize.
Some ethical issues are very subtle.
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Major Sources of Ethical Values in
Business
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Religion
The great religions converge in the belief that adivine will reveals the nature of right and wrong
behavior in all areas of life, including business.
Christian managers often seek guidance in the
Bible. Managers believe in Hinduism are influenced by
their religious scriptures like Upanishads, Puranas
etc.
In Islam the Koran is a source of ethicalinspiration.
In the Jewish tradition, managers can turn to
rabbinic moral commentary in the Talmud and the
books of Moses in the Torah. 12
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Philosophy
Even after two millennia, there remains
considerable dispute among ethical thinkers about
the nature of right action.
Greek ethics
Socrates asserted that virtue and ethical behavior were
associated with wisdom and taught that insight into life
would naturally lead to right conduct.
Plato carried this doctrine of virtue as knowledge further
by elaborating the theory that absolute justice exists
independently of individuals and that its nature can be
discovered by intellectual effort.
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Philosophy (continued)
Aristotle spelled out virtues of character in theNicomachean Ethics and advocated a regimen ofcontinuous learning to improve ethical behavior.
Epictetus taught that virtue was found solely
within and should be valued for its own sake,arguing that this inner virtue was a higher rewardthan external riches or worldly success.
The great Catholic theologians St. Augustineand St. Thomas Aquinas both believed that
humanity should follow Gods will; correctbehavior in business and in all worldly activitywas necessary to achieve salvation and life afterdeath.
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Philosophy (continued)
Secular philosophers such as Baruch Spinozatried to demonstrate ethical principles with logicalanalysis rather than ordain them by reference toGods will.
Immanuel Kant tried to find universal andobjective ethical rules in logic.
Jeremy Bentham developed the idea ofutilitarianism as a guide to ethics, validating twodominant ideologies: democracy and industrialism.
John Locke developed and refined doctrines ofhuman rights and left an ethical legacy supportingbelief in the inalienable rights of human beings.
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The Realist School
of Ethics The realists believed that both good and evil were naturally
present in human nature; human behavior would inevitably
reflect this mixture.
Niccol Machiavelli argued that important ends justified
expedient means.
Herbert Spencersupported a harsh ethic that justified
vicious competition among companies because it furthered
evolution.
Friedrich Nietzschesaid that nice ethics were
prescriptions of the timid, designed to fetter the actions ofgreat men whose irresistible power and will were regarded
as dangerous by ordinary mortals.
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Cultural Experience
Every culture transmits between
generations a set of traditional values,
rules, and standards that define
acceptable behavior. Civilization is a cumulative cultural
experience consisting of three stages:
Hunting and gathering stageAgricultural stage
Industrial stage
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Ethical Variation
in Cultures Ethical values differ among nations as historical experiences
have interacted with philosophies and religions to create
diverging cultural values and laws.
The school ofethical universalism holds that in terms of
biological and psychological needs, human nature is
everywhere the same.
The school ofethical relativism holds that although human
biology is everywhere similar, cultural experience creates
widely diverging values, including ethical values.
Because of globalization, corporations struggle with thequestion of how to apply conduct codes across cultures.
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Law
Laws codify, or formalize, ethical
expectations.
Corporations and their managers face a
range of mechanisms set up to:
Deter illegal acts
Punish offenses
Rehabilitate offenders
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Damages
In civil cases courts may assess damages, or
payments for harm done to others by a corporation.
Compensatory damages are payments awarded to
redress concrete losses suffered by injured parties.
Punitive damages are payments in excess of awronged partys actual losses, awarded to deter
similar actions and punish a corporation.
Since the purpose of punitive damages is to punish
and deter misconduct, they must be large enough tocause pain, yet they raise many questions about
fairness.
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Criminal Prosecution of Managers and
Corporations
Managers may be prosecuted for criminal
actions undertaken in the course of their
employment.
Corporations are criminally liable forcorrupt actions or omissions of managers if
those actions are intended to benefit the
corporation.
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Factors That Influence Managerial
Ethics
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Leadership
The example of company leaders is
perhaps the strongest influence on
integrity.
A common failing is for managers toshow by their actions that ethical duties
can be compromised.
If the leader does something, anopportunistic employee can rationalize
his or her entitlement to do it also.
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Strategies and Policies
A critical function of managers is to create
strong competitive strategies that enable
the company to meet financial goals
without encouraging ethicalcompromise.
Unrealistic performance goals can
pressure those who must make them work.
Reward and compensation systems can
expose employees to ethical compromises.
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Corporate Culture
Corporate culture refers to any set of
values, norms, rituals, formal rules, and
physical artifacts that exists in a company.
Three levels of corporate culture:Artifacts
Espoused values
Tacit underlying values
Often inconsistencies are observed
between the levels.
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How Corporations Manage
Ethics
Establish standards and procedures.
Create high-level oversight.
Screen out criminals.
Communicate standards to employees.
Monitor and set up an anonymous hotline.
Enforce standards, discipline violators.
Assess areas of risk, modify the program.
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Concluding Observations
The business environment is rich in sourcesof ethical values. Yet strong forces in bothmarkets and corporations act to depressbehavior.
Managers can use a range of methods todiscourage transgression and encouragehigh ethics.
Individuals also have a range of principleswith which to enrich their ethical thinking andpowerful methods with which to make ethicaldecisions.
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