why ethics makes good business sense

8/13/2019 Why Ethics Makes Good Business Sense

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Why ethics makes good

business sense An analysis from the macro as well as micro

points of view Common unethical practices and their adverseimpact on the economy Trusteeship and the Gandhian principles of

wealth management Wisdom leadership Concepts from the Indian

ethos


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Macro Perspective

Unethical behavior harms the nationaleconomy by hindering genuine market system,thereby reducing productivity and wealth.Hence the need for ethical conduct.

The market system calls for, among things,the following conditions:a)the right to own and control private propertyb)freedom of choice in buying and selling goods

and servicesc)easily available and accurate information

about these goods and services


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Bribery and tipping / greasing / payingspeed money

Deception

Theft

Unfair Discrimination Coercion

Common Unethical Practices in Business &the impact of some practices on theeconomy:


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Bribery: Offering, giving, receiving, soliciting of something

of value (money, service, kickback or other asset)

Difficult to determine intent of gift-giver when

cultural norms allow for exchange of gifts duringfestivals (e.g. Gift giving during Diwali).

Bribery leads to reduced quality of products/services (since something that is not sub-standard would have existed on its own merit) +increased costs (when the cost of the bribe isloaded on to the cost of the product / service)


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Deception:

Act of deceiving, intentional misleading by

spoken / written falsehood, misrepresentingdata pertaining to a fact/ situation

Deception reduces customer satisfaction.


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Theft: Taking of something that belongs to another,

Stealing Property may be physical or

conceptual Theft leads to increased costs, as the

genuine users effectively end up paying forthose who use the products / services but

dontpay.


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Unfair discrimination: Unfair treatment because of race, age , sex ,

religion or other groupcriterion

A failure to treat all equally when no

reasonable distinction can be made betweenthose favoured and those discriminatedagainst (Relevant criteria for discriminationusually includes merit, qualification,experience, contribution to the firm)


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Coercion:

Controlling people by force or threat Could be actual, direct and positive

May be for a one-time transaction or a seriesof transactions in a business relationship

Coercion leads to reduced quality of products/services + increased costs


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Micro Perspective: To function effectively, business needs trust

In turn, trust calls for ethical behavior

(between stakeholders, during transactions,as well as on a continuing basis inrelationships)

Hence, business needs the foundation of

ethical behavior


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TrusteeshipManagement Trusteeship = holding and managing resourceson behalf of the stakeholders of the firm.

Therefore, trusteeship => element of equity,placing other stakeholders such as employees,customers and society on the same rung aslarge and small shareholders.

The idea is that all wealth, including human,financial and technological resources, belongsto society and the rewards accumulating fromtheir use must revert to society at large.


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Principles:

Resources must be held and utilized for the benefitof society. Managers are the trustees of the stakeholders and

must work towards optimizing stakeholder value, notmerely maximizing shareholder value.

The small investor has as much a say in decisions asthe large investor. Trusteeship might lead to a disincentive for

efficiency and efforts: When individual and groupefforts are correctly aligned with social needs, the

possibility of de-motivation or deliberate inefficiencydoes not arise. Conviction in the utility of theconcept, coupled with the commitment of topleadership, would ensure efficiency as well aseffectiveness.


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Gandhian philosophy: The Indian perspective:The wisdom of the Vedas and Upanishads pointtowards holistic progress, not fragmentedmovement in which one section gains at a cost toothers. Moreover, the cycle of give-and-take isexplained at great length.The Gandhian philosophy of wealth management is

based on the principle that a wealthy man does nottruly have the right to hoard wealth solely for theself; the only right he has is that to an honorablelivelihood.


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Gandhian Tradition Overall happiness is the key to balanced human

progress.

There is enough for everybodys need and not foreverybodys greed.

Gandhi's humanism is reflected in his deep faithin the goodness of human nature.

Provides a basis for developing the idea of humancharacter development means of preventing valueerosion in modern societies.

Swadeshi is a basis for economic self reliance.


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Ethics and Indian

Management

Indianism

Using Indian

civilizationexperience plus

intellectualtraditions

Morerelevant

knowledgebase +

culturallyrelevanttheories

means To develop


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Different Indian IntellectualTraditions

MAJORINDIAN

INTELLECTUAL

TRADITION

S

Arthasastra

vedantic

LIFO

Syadvada

Gandhia

n

Commo

nism

Confluencism

CulturalNationli

sm

OSHO


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Arthasastra tradition: Artha means wealth or material advancement

Artha is material well-being special wealth. It

recognizes the existence of the law of Fish knownas Matsa Nyaya, where the stronger one wouldsallow the weak is recognized.


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Liberation from Oppression

(LIFO) It means liberty/freedom from domination.

Great saints have already talked on this tradition

and this reflects in their works also. Social reformers/ workers have drawn their ideas

from this tradition.

When work place becomes oppressive, the need

for liberation from oppression becomes vital.


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Syadvada:(Multiple

Perspective) The Syad or viewing from a particular view point

that is also related to other view points isessential for arriving at the final conclusion.

Hence problems should be used from multipleperspectives.


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Communism: Considers the common man as the pillar of the

social drive.

Different periods of history are to be viewed interms of both progress and decline.

History is viewed in terms of the degree ofoverall happiness of the common man, instead of

the unidirectional criterion of economic progress. Seen from the common mans perspective in order

to create the humanistic & eco-friendlycivilisation.


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Confluencism: Confluence is the meeting point.

Let noble thoughts come to us from every side.

In terms of give and take process betweenvarious cultures, means a two way process of the

flow of ideas.


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Cultural Nationalism: Based on the concept of a nations culture and self

dignity as a basis for the societies regeneration.

Argues for restoring self pride and self-dignityof the individual society.

Positive ideas could be borrowed, negativeinfluences must be avoided for achieving social

regeneration.


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OSHO Tradition: Ideas of Rajneesh, who rejected most of the

current ideas of world views about man, state andsociety.

Every individual has full Godliness within ham isthe key message of Rajneesh.

OSHO literature is very vast and controversial.


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Basic Framework of

Normative Ethics

Natureof

Ethics

Concept ofethics

Study of

Ethics

Science ofEthics

(NormativeScience)

Deals with

humanconduct


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Normative Ethics Normative means something that guides or

controls

Aims to discover what should be the moralstandards that are supported by the bestreasons


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TeleologicalTheory

DeontologicalTheory

EthicalEgoism

UtilitarianPrinciple

Kantianism


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Teleological theory Derived from Greek word telos means end

Determine ethics of an act by looking to theconsequences of the decision (The Ends)

Utilitarianism and Distributive Justice are based

on teleological approach


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1. Ethical Egoism An action is good if it produces result to

maximize persons self-interest at the expenseof others.

It denies that a person should help others whenthe person will get nothing out of it.

Enlightened egoism is enlightened self interest

considers the long range perspective of other orhumanity on the whole.


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2. Utilitarianism Our obligation or duty in any situation is to

perform the action that will result in the greatestpossible balance of good / evil.

1. Classical Utilitarianism: needs to determine theaction is right if and only if it produces thegreatest balance over pain for everyone.

2. Traditional Utilitarianism: Utilitarianism was notan tower of philosophy but a powerfulinstrument for social, political, economic andlegal change.


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Classical Utilitarianism


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1. Universalism: The consequences to be considered are those of every

one alike

2. Consequentialism: It is seen as the broadest term referring to ethical

theories that claims what makes an action right orwrong is the consequences not the internalcharacter of the action.

3. Hedonism: Happiness plays a fundamental role in human conduct.

It shares the commitment known as Hedonism.4. Maximalism:

In the first formulation it is the principle in which itmay be either good or bad principle.

Secondly maxim is expressed when a more responsibledecision on confidentiality might be expressed.


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Strengths of Teleological Theory

It provides a relatively precise and objective

method for moral decision making. The goodness of consequences can easily be

measured and compared

Weaknesses of Teleological Theory

We have an obligation to keep our promises, even when

more good might be achieved by breaking them.


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Deontological Theory

Derived from Greek word deon means duty

This approach believes we have a duty not to dobad

Bribery is wrong by its very nature regardless ofthe consequences

Deontological concepts promotes that of theheart and pertains to the duty orientation

As per this theory people behave ethically as theyfind it their sincere duty towards any goal.


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Kantianism- Emmanuel Kant For Bentham it is Happiness, for Kant it is

goodwill

An action is morally right only if the personperforming it is motivated by a good will and vice-versa.

A goodwill means action done for reasons of

principle from a sense of duty, nothing else. Self interest is not be the motive, but neither can

kindness, loyalty, sympathy. These thoughts canbe admirable.


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Strengths of Deontological

Theory This theory makes more sense in cases where

consequences seem to be irrelevant

It is the way they account for the role of motivesin evaluating actions


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Weaknesses of Deontological

theory Failure to provide a probable account of how our

moral obligations and resolve problems of moralconflict

There is no order of priority to guide in caseswhere they conflict

E.g. should we keep promise or tell the truth whendoing so will harm someone?


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Virtue Ethics- Aristotle It asks What kind of person should we be?

Virtue Ethics Theory does three things:

It defines the concept of virtueIt must offer some list of virtues

It offers some justification of that list and explain howwe define what are virtues and vices

E.g. Honesty is in the list of the virtues.


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Aristotle defines Virtue as - a character trait that manifests itself in habitual

action

For Greeks virtue means Excellence

Virtue Ethics= Excellence of Human Character

why ethics makes good business sense

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