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Business Ethics
Suggested Readings
Murthy C V S, Business Ethics, Himalaya Publishing House
Banerjee R P, Ethics in Business and Management, Himalaya Publishing House
Business Ethics- Principles & Practices- Daniel Albuquerque
Indian Ethos and Values in Management- R Nandagopal & AjithSankar R N
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Syllabus in Prescribed book- Business Ethics- Author -CSV Murthy
Unit I:- Introduction Meaning of Ethics- 1.3 Definition of ethics and Business Ethics-
1.4 Objectives-1.9, Nature- 1.10 and sources of ethics- 1.11 Types of ethics – 1.16 Need for Business Ethics-1.17 Importance and nature of Business
Ethics – 1.18 Factors influencing Business Ethics- 1.20 Business and Ethical Responsibility-1.21
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Meaning of Ethics
In Latin language-Ethics is called Ethicus
In Greek it is called as Ethicos.Ethos means Character or manners.
Ethics is said to be the source of morals
-recognized rules of conduct.
Business ethics are moral principles that define right and wrong behaviour in the world of business.
What constitutes right and wrong behaviour in business is determined by the public interest groups, and business organisations,as well as an individual’s personal morals and values
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Three tests used forunderstanding business ethics inorganisations
1. Test of agreement with the evidence
2. Test of internal coherence
3. Test of its compatibility
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Ethical Performance
Ethical business performance means adhering to society’s basic rules that define right and wrong behaviour.
Major Social challenges faced by business is to balance ethics and economics.
Society wants business to be ethical and economically profitable at the same time
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Three terms used to define ethics are
1. Right
2. Proper
3. Just
Terms – bribery, theft and collusion in business unethical practices.
Collusion is a secret agreement to deceive
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Sources of Ethics
1. General Inheritance
2. Religion
3. Philosophical Systems
4.Legal System
5. Codes of Conduct
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Ethics & Business
Ethics conflicts with profits, whereas
Business always choose profits over ethics
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Types of Ethics
There are three different types
1. Transactional Ethics
2. Participatory Ethics
3. Recognitional Ethics
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1. Transactional Ethics The domain of ethics covering
transactions that are performed on thebasis of simultaneous or connectedinterests and that are general by theprinciples of
Equality,Honesty and,Reciprocity is indicated as the domain
of transactional ethics.
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2. Participatory Ethics It is about the shape of solidarity in an
age of individualisation. It is the ethics of the civil society,
recently rediscovered as a solid ground for collective arrangements where both the marked and the state fail.
By participating on a regular basis, in common projects on behalf of general welfare, a corporation demonstrates that it can take seriously its corporate citizenship. 16-01-2015 S.B.Seshadri,Asst. Prof,NERIM 13
Participation voluntary, guided by the social relations and on two particular moral principles
Principle of Decency-A real opportunity to contribute to the general welfare presents itself and no insurmontableobstacles arise, one should have solid moral reasons not to go for it.
Principle of Emancipation- Special attention is given to the least powerful in order to defend those, who,bythemselves, are defenceless.16-01-2015 S.B.Seshadri,Asst. Prof,NERIM 14
3. Recognitional Ethics The domain of recognitional ethics
covers a large part of traditional ethical interventions.
Ethics in fact is about asymmetrical relations about the rights of interests of the one generating a duty for another.
Principle of Recognition Principle of beneficence or
nonmalificence
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Need for Business Ethics
1. Business operates within the society
2. Every business irrespective of size exists more on ethics means or in total regard to its social concern to survive long
Business needs to function as responsible corporate citizens in the country
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Importance of Business Ethics
1. Personal gain
2. Individual values vis a visorganisational goals- whistle blowing
3. Managers values and attitudes
4. Competitive pressures
5. Cross-cultural contradictions
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Five Factors influencing Business Ethics
A) Leadership
B) Strategy and Performance
C) Environment
D) Corporate Culture
E) Individual Characteristics
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Unit II:- (Chapter 2) Values, Norms and standards Values- Norms- Beliefs- Moral Standards, Beliefs and their role- Ethical codes- (Chapter 3) Theories of ethics- Ethical reasoning- Ethical decisions- Normative ethics in Management- Ethical theories
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Unit II
Values ,Norms, Beliefs and Moral standards
Values are a general term referring to those things which people regard as good,bad,right,wrong,desirable,justifiableetc.
Business is driven by values. Values determine
What business people do? How others react?
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Values are potent sources of conflict as well as of co-operation, control and self-control.
Through Values, business can and does create value in the form goods,services,employment, etc.
Some values prevent this process from working properly or at all.
Ex:- Liquor trade, unethical trades etc.
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Types of Values 1. Cultural –represent the expectations
of stakeholders and set of standards of technical skills in business .
2. Moral-Important ones which are deep-seated ideas and feelings that manifest themselves as behaviour or conduct. Difficult to measure or express in words.
3.General & Control Values- capable of judging the acceptability of the prudential and technical value.
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Managerial Values In 1975, An international study was done by George from England with focused approach on importance of Goods of organisations like
- productivity - profit maximization - employee welfare - organisationalgrowth,stability,efficiency
- industry leadership, - Social welfare
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The Study categorises the primary orientation of the managers are:-
Pragmatic- It is pertaining to public business or skilled in affairs
Moralistic(Ethical –moral code). Evaluative frame work consisting of ethical considerations influencing behaviour towards actions and decisions, judged to be “right” and away from those judged to be wrong.
Affective(Feeling)- Suggests an evaluative framework guided by hedonism- one behaves in ways that increase pleasure and decrease pain.Hedorism is the doctrine that tells happiness is the highest good.
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Features of Values-( DNA)
1. Descriptive – (Something like using ‘is’ of ethics)
2. Normative- ( Something like using ‘ought to be ‘ of ethics)
3. Analytical- ( Something like using ‘why’ of ethics)
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Norms
Norms are expectations of proper behaviour, not requirements for that behaviour, a major difference between a norm and law.
Each individual within the society has a set of norms,beliefs, and values that together form his or her moral standards.
Norms are the ways an individual expects all people to act, when faced with a given situation.
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The norm is not published , may not be obeyed and cannot be enforced- except by the sactions of a small group whose members hold similar norms and use such penalities as disapproval or exclusion.
It is not consistent nor universal.
Norms are just the way we feel about behaviour. They are neither logically consistent nor universally applied because we have never thought through the reasons we hold them.
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Beliefs
The beliefs in an ethical code are standards of thought.
Beliefs are criteria of thought. They are the ways an individual expects people to think about given concepts.
Beliefs are different from norms, since we do not find any action- only an abstract way of thinking, no untoward behaviour with others. It tends to support an individual norms.
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Moral standards
Law is a dynamic entity since the rules prevalent now will change after some period.
Moral standards- it includes the norms we have about the kinds of actions we believe are morally right and wrong as well as the values we place on the kind of objects we believe are morally good and morally bad.
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Ethics of Business competition vs. competition in sports
To win or gain financially , sportspersons take drugs, practice unethical means etc
It is very difficult to win but easy to loose indulging in wrong means – even at conscience level if not caught.
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