BUSINESS ETHICS

BY Aniruddh

Archana YadavJohn Vincent

Meenakshi ShrimaliNikhil Ranjan

Sparsh Nagpal

Laws, Morals, Ethics: What’s the Difference?

• Laws: A set of rules for personal or corporate behavior; civil and/or criminal penalties apply

• Morals: A set of standards for (personal) behavior• Ethics: A set of standards for (professional) behavior

• Morals and ethics are voluntary in some sense• Like laws, they are open to many interpretations

Ethics Definitions:

• A system of moral principles, by which human actions and proposals may be judged good or bad or right or wrong (Macquarie Dictionary) ;

• . . . rules of practice in respect to a single class of human actions; as, political or social ethics; medical ethics (Webster’s Dictionary)

Definition:• “Framework for human conduct that

relates to moral principles and attempt to distinguish right from wrong”

(Miesing & Preble 1985)• Codes of ethics can be “viewed as an

ethical framework rather than a solution to a problem”(Harris et al)

When did ethics begin?• In most cultures, ethics are connected with divine origins:

•Babylonian civilization received laws of Hammurabi from sun god.

•God gave 10 commandments to Moses• In Greek civilization, Plato says that god Zeus gave morality to help mankind

•Manusmriti Samhita incorporates earliest code of social and legal ethics in India

Ethics – Indian view• Indian religion has always been associated with

philosophy• The Veda's (about 4000 years old) talked about 4 basic

goals of existence:• Prosperity• Satisfaction of desires• Moral duty • Salvation• Upanishad's distinguished between law and ethics – ethics

come from inner desire

Universal Values

Based on: Smith, Huston (1994). The Illustrated World's Religions. San Francisco: Harper.

RESEARCH SURVEY !!

In a recent Wall Street Journal article, Psychology professor Steven Davis says that cheating by high school students has increased from about 20 percent in the 1940’s to 75 percent today.

“Students say cheating in high school is for grades, cheating in college is for a career.”

Is business ethics an oxymoron?• Ethics = doing what’s right, building better

societies• Business = playing to win, doing what’s good

for the firm• So are we really Professors of Oxymoronity ??!!

(Oxymoron Def. 1. a combination of contradictory terms, also considered a paradox. 2. a contradiction in terms)

How Are They Related To Business!!

Global Business Ethics

Are ethics and business compatible?• In an extreme, altruistic sense, business and

ethics may seem incompatible:• Earning profits may also be a unethical• In Islamic finance, earning interest is unethical

• All possessions stem from insecurity; insecurity comes from mistrust:• Therefore, possession itself may be

unethical in extreme sense • Lots of businesses may need violence of

some degree:• E.g., Medical research

• Where do we draw the line between business and morality:• If the approach is subjective, then ethics lose their meaning as everyone defines ethics to suit one’s convenience

• Is there a universal, perennial definition of “ethics”?

Business Ethics Violations

John Rigas, CEO - Adelphia• Built a $13 million golf

course on personal property.

• Paid for Manhattan apartments for family members.

• Covered hundreds of millions of dollars of the family's stock losses.

Misappropriation of Funds:

Dennis Kozlozski, CEO - TycoState Charges:• Conspiracy• Tampering with Physical

Evidence• Falsifying business

records• Sales Tax Violations

Types of misconductType of misconduct observed Employees

observing itLying to employees, customers, vendors, or the public 26%

Withholding needed information from employees, customers, vendors or public

25%

Abusive or intimidating behaviour towards employees 24%

Misreporting actual time or hours worked 21%

Discrimination on basis of race, gender, etc 17%

Sexual harassment 13%

Stealing, theft, or related fraud 12%

Breaking environmental and safety laws/regulations 12%

So what can we do….?

Normative theories

• Consequentialism and cost-benefit analysis

• Duty or rights based approaches

Typical Perspective

Single normative consideration for solving the ethical dilemma

Ethical Dilemma

‘Lens’ of ethical theory

Variety of normative considerations in solving the ethical dilemma

“Prism” of ethical theories

Ethical dilemma

The value of ethical theories in facing ethical dilemmas in business

Ethical Decision Making As Balancing

W

W

R

R

An alternative approach to business ethics?• Identifying the opportunities for change

and the ‘structures of constraint’.• Enhancing moral imagination

• Recognising and understanding different moral perspectives.

• Explaining and rationalising these perspectives.

• Developing new ways of considering responsibilities of business in society.

Opportunities for change• Acknowledging and understanding the

barriers.• Encouraging moral awareness and literacy

– going beyond the business case.• Providing the tools for ethical decision-

making.• Fostering creativity and moral imagination.• Walking the talk.

Solution???

Creating the Ethical Imperative

• Written code of ethics• Employee commitment• Employee training• Discipline process• Full disclosure• Building expectations• Resolution process – conflict

management

Example

THE INFOSYS MODEL• A formal code of business conduct and ethics.

• To be signed and adhered to by employees.

• Action against any employee for violation thereof.

THE INFOSYS MODEL -Contents

• General standards of conduct.• Management of conflicts of interest.

• Prohibition of exploitation of corporate opportunities.

• Protection of company’s confidential information.

• Obligations under securities laws.

• Use of assets.• An entire section on responsibilities to customers and stakeholders.

Conclusions…• There are ethics in business … they’re

just not always visible, and don’t necessarily lead to the kinds of behaviour we’d like.

• Morally motivated behaviour is possible in business, but is subject to considerable, and quite rigid structures of constraint.

• There are few right and wrong answers, just better or worse decisions, or more widely acceptable behaviours.

• Being ethical in business is a creative endeavour not just a rational one.

“Whistleblowing”How can you do the right thing and not lose your job?

• Don’t trust everyone to do the right thing—proceed with caution.

• Gather the evidence you need.• Make sure you’re right.• Don’t exaggerate or overstate your

case.• Wait for the right time to come forward.• Remain anonymous—the problem is the

issue, not you.

Sayings By Great People On Ethics…

Be sure you are right, then go ahead.

Davy Crockett 1786-1836

When the situation needs improvement, Gandhi offers guidance: “You must be the change you wish to see in the world.”

Can you make a

difference?

THANK YOU