l-1.introdn to business ethics

8/13/2019 L-1.Introdn to Business Ethics

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Introduction to Business Ethics

Lecture- 1

Prof. C. Anand

IBS, Hyderabad


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Contents

This deals with:-

I. Introduction to Ethics, Business Ethics,

Morals & Values

II. Theories of EthicsIII. Conflicts in Decision Making from Business,

Legal and Moral Points of View.


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1. Introduction to Ethics, Business Ethics,

Morals & Values

Ethics: It deals with human behavior. It assesses whether a

particular act or decision taken by an individual is moral or not

and also what is right and what is wrong. Ethics is the science of

morals, moral principles and recognized rules of conduct. It is a

systematic knowledge about moral behavior and conduct of

human beings.

Business Ethics: Business Organizations are sub-systems of

societal systems. They are also instruments of society to

produce goods and services. They affect and are affected by the

society. They can not function effectively if the Society is not

healthy. Hence organizations should positively contribute tosociety's health. Some organizations violate basic principles and

laws on child labor, human rights, discrimination, fair wages and

consumers interests. They compromise on safety and quality

standards producing goods that are dangerous.


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Morals & Values Irregularities of Organizations:

- Neglect of Duties and Responsibilities towards Employees

and Society

- Abuse of Power

- Unfair Treatment (Harassment by Officials)

- Misappropriation

(Embezzlement, Creative Accounting, Tax Evasion)- Cheating, Bribes and Kickbacks

- Damage to People, Property or Environment

BEis a specialized study of moral right and wrong. It concentrates

on moral standards as they apply to business policies, institutions

and behavior. BE is a form of applied ethics. It includes not onlythe analysis of moral norms and moral values, but also attempts to

apply the conclusions of this analysis to that assortment of

institutions, technologies, transactions, activities, and pursuits

that we call Business.


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Morals & Values

Corporate Issues in BE: These are ethical

questions raised about a particular company.

These include questions about:-

Morality of the activities

Policies

Practices

Organizational Structure

Individual Issues (Morality of decisions,

actions, or character of an individual)


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Morals & Values

Morals and Values:

Morals: Morals are the principles of right and wrong.

Morality refers to the standards of conduct that are accepted as

right and proper.

Moral Standards deal with desired right and wrong human

behavior. They focus on what ought to be done and what ought not

to be done by an individual or group in a given situation.

A person is morally responsible only for those acts and their

foreseen injurious effects (a) which the person knowingly and

freely performed and which it was morally wrong for the person to

perform or bring about, or (b) which the person knowingly and

freely failed to perform or prevent and which it was morally wrong

for the person to fail to perform or prevent. It also means moral

duty or moral obligation.


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Morals & Values

Moral Reasoning refers to the reasoning process by which

human behaviors, institutions or policies are judged to be inaccordance with or in violation of moral standards. It involves: (i)

Understanding of what reasonable moral standards require,

prohibit value or condemn; (ii) Evidence or information that

shows that a particular person, policy, institution, or behavior

has the kinds of features that these moral standards require,prohibit, value, or condemn.

A Moral Virtue is an acquired disposition that is valued as part of

the character of a morally good human being and that is

exhibited in the persons habitual behavior. A person has a

moral virtue when the person is disposed to behave habitually inthe way and with the reasons, feelings and desires that are

characteristic of a morally good person: (Exp. Honesty is valued

as a character trait of morally good people)


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Morals & Values.)

Values, Virtues, etc.

Values are the accepted principles or standards of an individual or

a group.

Virtue is an aspect of character or personality that an individual

desires in him or others.

Virtue Ethics is concerned with attaining these dispositions ofcharacter or personality that an individual desires in him or others.

Nature of Business:

Most Business Organizations encounter two types of ethical

Problems: Overt (Bribery, theft, collusion, etc.) and Covert

(Corporate acquisitions, marketing, personnel, capital investment,etc.) which have deft ethical solutions. An ideal ethical decision

comprises of virtues: Right, Equitable, Good, Proper, Fair and Just.

Obligations are outcome of ethical decisions, which should focus

to society at large and not to individual.


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Morals & Values

Stages of Ethical Consciousness in Business:

Stage 1: Law of Jungle (Business run on Brute Strength)

Stage 2: Anything for Profit ( For profit anything like false

representation, bribery, tax evasion is resorted to)

Stage 3: Profit Maximizing in the Short-term (Believes goodbusiness is good ethics)

Stage 4: Profit Maximizing in the Long-term (Shift in focus from

business to ethics. Ethical aspects supervised)

Stage 5: Stakeholders Concept (Concentration on profits with

service to stakeholders and good to society).

Stage 6: Corporate Citizenship (Higher level of ethical

consciousness and redefines mission of business in society).


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II. Theories of Ethics

II. Theories of Ethics:

Ethics is the field of enquiry. Morality is the object of that enquiry.

Ethical Theories are divided unto 3 areas viz. 1. Metaethics, 2.

Normative Ethics and 3. Applied Ethics. They are described below:-

1. Metaethics:

It deals with ethical issues. It is the study of the origin and meaningof ethical concepts. It deals with the following 3 issues:-

Metaphysical Issues (Deals with the question whether moral values

exist independently of humans or they are simply human

conventions);

Physiological issues that deal with the psychological basis of themoral action; and

Linguistic issues that deal with the meaning of the key moral terms

we use.


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2. Normative Ethics: This branch of Ethics guides human

conduct. It sets out certain moral standards that help us to

determine what is right and what is wrong (Exp. The golden

rule that we should treat others the same way that we want

others to treat us).

Other Normative Theories agree that if a moral principle is to be

accepted, it must be:

Prescriptive: Implies that Action is obligatory or Command.

Universal: Applicable to any person

Overriding: Should be primary consideration in assessment

Public: Presupposes social interaction Practical: Must be achievable by an average individual in

ordinary circumstances.


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The 3 Normative Theories:

(i) Teleological Ethical Theory: Teleological means thinking rationally about ends. It holds that an action

is considered morally correct if the consequences of that action are more

favorable than unfavorable. If the good consequences are greater than the

bad consequences, the action is morally right. The drawback of this

theory is that it is difficult to quantify the consequences of our actions.

Consequentialists have offered three definitions of good. Each of thesedefinitions gives us different moral theories.

They are:

Egoism: An action is morally right if the consequences of that action are

more favorable than unfavorable to the individual performing the action.

Utilitarianism: An action is morally right if the consequences of thataction are more favorable than unfavorable to everyone.

Altruism: An action is morally right if the consequences of that action are

more favorable than unfavorable to everyone except the individual.


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(ii). Deontological Ethical Theory: They focus on fundamentalduties/obligations. The duties are to God, to Oneself and to

Others.

(iii) Virtue Ethics: (Proposed by Greek Philosopher Aristotle).

Virtue is defined as any disposition of character or personality

that an individual desires in himself or others. In other words,

virtues are those dispositions of character, which an individual

considers to be good. Virtue Ethics is concerned with attaining

these dispositions. It emphasizes on character development

rather than on abstract moral principles that guide actions.

3. Applied Ethics: This deals with specific, often controversial

moral issues (such as abortion, infanticide, cloning, testing drugs

on animals). Businesses too face controversial moral choices like

misleading advertisements, insider trading, bribery, corruption,

etc. Ethical behavior is important for long-term success in

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III. Conflicts in Decision Making

(From Business, Moral & legal Points of View)

Conflicts in Decision Making Conflicts/Problems/Dilemmas in decision making in business

arise because the nature of business is very complex. Some of

these issues pertain to: Pricing, Advertising, and Promotion,

working condition, environment, customer service, workforce

reduction, community relations and supplier relations. To resolve such conflicts, etc. and for proper decision making,

some degree of analysis is required which we call Multiple

Analyses. These Multiple Analyses have three methods of

analysis: Economic, Legal and Ethical (Moral).

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III. Conflicts in Decision Making(From Business, Moral & legal Points of View)

Multiple Analysis:Economic Analysis: Market Economy has a limited number of

resources and when consumers are supplied with highest

quality of goods at lowest possible costs, these resources

should be used as effectively and efficiently as possible.

Legal Analysis: A democratic society can establish its own rules.If people and organizations can follow those rules, the

members of society will be treated as justly as possible.

Ethical (Moral) Analysis: The underlying belief is that if all the

rational men and women in a society acted on the same

principles of either beneficial or consistency, then the membersof that society would be treated as fairly as possible. ****

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l-1.introdn to business ethics

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