BUSINESS ETHICS

Prof. P. K. BRAHMA
IMT,CDL
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.
How lonely are the Humans!
A bundle of contradictions,
Ignorance and arrogance,
Prejudice and superstitions,
Bigotry and fanaticism,
Illusions and hallucinations.
Tamoso Maa Jyotirgamayo.
Let the Lights remove all Darkness,
Let Noble Thoughts come from all sides.
.
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1. Introduction: Concepts of Market, Business
and Ethics
1.1 Definition of Ethics
1.2 History of Ethics and Business Ethics
1.3 Scope of Business Ethics
1.4 Applicability of Business Ethics

2. Theoretical Issues of Business Ethics
2.1 Deontological Theory of Emanuel Kant
2.2 Utilitarianism
2.3 Cognitivism vs Non-Cognitivism
2.4 Consequentialism vs non-Consequentialism
2.5 The Concept of Rights
2.6 Ethical Relativism
2,7 Secular Morals vs Religious Morals


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3.Indian Ethos- Ethical Heritage of India
3.1 Vedic and Vedantic Ethics
3.2 Ethics of the Gita
3.3 Buddhist Ethics
3.4 Ethics of Jainism
3.5 Philosophy and Ethics of Swami Vivekananda
3.6 Philosophy and Ethics of Mahatma Gandhi
3.7 Philosophy of Rishi Aurobindo
3.8 Philosophy of Rabindra Nath Tagore
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4. Ethics in Action: Corporate Governance
and Corporate Social Responsibility
4.1Ethics and Laws- the Iron law of Responsibility
4.2 Basic Responsibilities of Companies and
Corporations
4.3 Shareholders vs Stake-holders
4.4 Economic Responsibilities
4.5 Social Responsibilities
4.6 Total Social Responsibilities
4.7 Corporate Social Reporting
4.8 Social Audit

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5. Ethics in Action: Ethics of Professions
5.1 Ethics of Chartered Accountants / Public Auditors
5.2 Ethics of Doctors and Medical Profession
5.3 Ethics of Engineers
5.4 Ethics of Lawyers
5.5 Ethics of Public Servants
5.6 Ethics of Teachers and Education Profession
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6. Ethics of Finance
6.1 Ethics of Accounting and Accounts Manager
6.2 Ethics of Financial Advisor
6.3 Ethics of Investment Bankers and Lenders
6.4 Ethics of the Stock Exchange
6.5 Ethics of Investments
6.6 Positive and Negative Areas of Investment
6.7 Government Control in Investment
6.8 Ethics of Investment in Social Sectors-Educational
Institutions and Healthcare
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7. Ethics in Action: Ethics of Production
7.1 Safety and Security of Industrial Establishments and
Equipment
7.2 Working Conditions and Environment in factories
and Offices
7.3 Quality, Quantity, Price and Supply of Products
7.4 Control of Pollution- Air, Water, Soil and
Environment
7.5 Transparency in Disclosure of Contents of Products





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8. Ethics in Action: Ethics of Sales and
Marketing
8.1 Ethics of Commercial Advertising
8.2 Control of Advertising
8.3 Customer Service and After-sales service
8.4 Customer Complaints Redressal Mechanism
8.5 Media Ethics- Paid News
8.6 Aggressive Marketing, Hostile Takeovers,
Manipulations
8.7 Mergers and Aquisitions
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9. Ethics in Action : Ethics at Work Place and
Organization culture
9.1 Factors Contributing to Bad Work Culture and Factors
Promoting good Work Culture
9.2 Role of HRD and Qualities of a Good Manager
9.3 Age of Stress Manifestations of Stress at Work Place
9.4 The Executive as a Yogi- the Indian Solution
9.5 Ethical Behaviour of Employers
9.6 Unethical Behaviour of Employees
9.10 White collar Crime
9.11 Sexual harassment
9.12Whistle Blowing
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12. Ethics in Governance-Ethics of the State
12.1 Ethics of the Political System-the Politicians
12.2 Ethics of Policing
12.3 Business-Politician-Criminal-Police Nexus
12.4 Ethics of the Bureaucracy
12.5 Ethics of the Judiciary

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International Business Ethics and Ethics of
Economic Systems
12.1 Economic Blocs and Cartels
12.2 Discriminatory Treatment of Nations on Issues like
Child Labour, Subsidy, Exploitation etc. in Trade
12.3 Ethics of Intellectual Property Rights
12.4 Political Influence of Transnational Companies
12.5 Discriminatory Treatment world Bodies like the
IMF, World Bank, WTO etc..
12.6 Treatment of Democratic and non-Democratic
Regimes
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Chapter 1:Introduction
Introduction
Shakespeare said the world is a stage (he meant acting -
we are all actors) but today, the entire world is a stage
not for acting but for business and marketing.
You find business anytime, anywhere and in
anything. And if there is Business (i.e. an economic
activity where there are buyers, sellers and
transactions for a consideration), there will be a
Market.
Except perhaps for a few hours at home ,you will
always find yourself in some market place or other.
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Types of Markets
1. The Retail Markets Food, Vegetables, fruits,
groceries, books, medicines etc.
2. Commodity Markets food grains, Cotton, jute etc.
3. The Raw Materials Markets Inputs for finished
products.
4. The Finished Goods Markets
5. The Capital Goods Markets
6. The Labour Markets
7. The Financial Markets- stock market, Banking,
Insurance etc.
8. The Service Sector Markets Transportation-air
road, railways ,water Communications, Health,
Hospitality, Entertainment ,Sports, Marriage Beauty
etc..
9. International Markets- Export-Import etc.
10. Cyber Market
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Applicability of Business Ethics

The common concept is business ethics concerns the
corporate sector. Modern concept is it should cover:
Ethics of companies & corporations.
Ethics of Public Accountants.
Ethics of Doctors and Medical profession.
Ethics of Lawyers and Law Firms.
Ethics of Public Administrators.
Ethics of Engineers
Ethics of Educators, Teachers & Educational
Institutions.
Ethics of traders, retailers and vendors.
Ethics of NGOs, Trusts and Institutions.
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Definition of Business and Ethics
Business is an economic activity , a transaction where
an offer is made by a seller and the offer is accepted
by a buyer for a consideration with the hidden
agenda of a gain or profit .
Ethics comes from the Greek word Ethos which
means character of the individual or the culture of the
community.
Business ethics is a form of applied ethics that
examines ethical principles and moral or ethical
problems that arise in a business environment. It
applies to all aspects of business conduct and is
relevant to the conduct of individuals and business
organizations as a whole. Applied ethics is a field of
ethics that deals with ethical questions in many fields
such as medical, technical, legal and business ethics.

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History of Business Ethics
Business ethics being part of the larger social ethics,
always been affected by the ethics of the epoch. At
different epochs of the world, people, especially the
elites of the world, were blind to ethics and morality
which were obviously unethical to the succeeding
epoch. History of business, thus, is tainted by and
through the history of slavery history of colonialism
and later by the history of cold war. The current
discourse of business ethics is the ethical discourse
of the post-colonialism and post-world wars. The
need for business ethics in the current epoch had
begun gaining attention since 1970s.Historically,
firms started highlighting their ethical stature since
the late 1980s and early 1990s, as the world
witnessed serious economic and natural disasters
because of unethical business practices. The Bhopal
disaster, and the fall of Enron are instances of the
major disasters triggered by bad corporate ethics.

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.
It should be noted that the idea of business ethics caught
the attention of academics, media and business firms
by the end of the overt Cold War. Cold Wars, seen
through pages of history were fought through and
fought for American business firms abroad.
Ideologically, promotion of firms owned by
American nationals were presented as if it were
freedom and the local resistance against the excess of
American firms were labeled as communist upraising
sponsored by the Soviet Block. Further, even
legitimate criticism against unethical practice of the
firms were presented as if it were infringement into
the 'freedom' of the entrepreneurs by activists backed
by communist totalitarians. This scuttled the
discourse of business ethics both at media and
academics. Overt violence by business firms have
decreased to a great extent in the democratic and
media affluent world of the day, though it has not
ceased to exist. The war in Iraq is one of the recent
example of overt violence by the liberal western
states on the behalf of oil business interests



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Plethora of Laws, Rules and Regulations to
govern Business
The Companies Act
The Income Tax Act
The SEBI Act
The Factories Act
The Environment Act
The Minimum Wages Act
The Provident Fund Act
The Hazardous Substances Act
The FEMA
The Consumer Protection Act etc.etc.
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Two Questions which arise:
1.When there is a plethora of Acts ,Rules and
Regulations to control business, where is the
need to frame a separate Code of Business
Ethics?
2.Why should the Corporate world be
periodically rocked by scandals in spite of
having the Code of Business Ethics?
The answer is Ethics begins where the Law
ends.
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Chapter 2. Indian Ethos: Ethical Heritage
of India
1.2 Indianness of Indian Business-Rediscovery of
Indian Schools of thought and Philosophy.
Treasure of Indian Philosophy and Ethical Values:
The Vedas (4)- Rigveda, Samaveda,Yajur-veda,
Atharvaveda (Nalayira Divya Prabhandham-
Tamil)
The Upanishads (123 books; 13 basic)
The Puranas (18)
The Greatest Epics -The Ramayana & The
Mahabharata
The Greatest Book of Philosophy-The Gita
Indian Schools of Philisophy (6)
Buddhism, Jainism, Jataka Tales,Panchatantra
and a treasure of unparalled Sanskrit & Pali
Literature, Ayurveda, Economics,Law, Logic etc.
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.
Many Hindu intellectual traditions were classified
during the medieval period of Brahmanic-Sanskritic
scholasticism into a standard list of six orthodox
(astika) schools (darshanas), the "Six Philosophies"
(ad-darana), all of which cite Vedic authority as
their source:
1.Nyaya, the school of logic
2.Vaisheshika, the atomist school
3.Samkhya, the enumeration school
4.Yoga, the school of Patanjali (which provisionally
asserts the metaphysics of Samkhya)
5.Purva Mimamsa (or simply Mimamsa), the tradition
of Vedic exegesis, with emphasis on Vedic ritual, and
6.Vedanta (also called Uttara Mimamsa), the
Upanishadic tradition, with emphasis on Vedic
philosophy.
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Ethical Principles of I ndian Society I ndividuals. Business and
Governance
1.Aims of Life: Four Phases of Life- Brahmacharya(Duties as
Student life), Grihastha (Duties as a Householder),
Banaprastha (Pilgrimage and Meditation), Moksha
(Salvation).
2. Duties of Life: Artha, Kama, Moksha, Dharma
Every individual including businessman and ruler must
conduct himself according to DHARMA i.e. honesty,
fairness, equity and with a sense of divine duty and
Nishkam Karma.
3. Style of Living: Spiritualistic against Materialistic:
Simple Living and High Thinking
4. Reverence for Elders: Matrideva bhaba, Pitrideva bhava,
acharyadeva bhaba , Atithideva bhava
5.Attitude towards Self: I nner Happiness, peace of mind,
Detachment, Yoga and Meditation. Chidanandam
6.Attitude to the World: Shanti, Sukham, Anandam-let there
be peace evrywhere-to humans, to vegetation, to the
universe.
Vasundhara Kutumbakam- the whole world is your family.
---Universalism

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Indian Concept of Indebtedness
Five Categories of I ndebtedness (Rin)
1.Devarin :-Indebtedness to supra- human powers
for the gifts of Sun, air, water light etc.
2.Rishi Rin :-Indebtedness to sages who leading a
life of utter self denial, realised the highest truths
and gave the wisdoms.
3.Pitri Rin :-Indebtedness to Parents and ancestors
for their cumulative contributions to us.
4.Nri Rin :-Indebtedness to humanity at large, to
countless people who have contributed to make
existence a reality.
5.Bhuta Rin:-Indebtedness to all sub-human
species - trees, animals, birds, fish, insects etc. for
their incalculable gifts to us.
Albert Einstein had the same concept.


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Principles of the Gita
Raj Yoga, Gyan Yoga, Bhakti Yoga (the Beauty of
Surrender)
Karma Yoga -Nisham Karma-Egoless work with Divine
Duty.
Karmanye aadhikaresthey maa phaleshu kadachana
Soul is indestructible- as you discard old clothes, the Soul
discards the old body and enters into a new body.
The cycle of death and birth is painful. You can avoid this
cycle and achieve Moksha (Salvation) through Nishkam
Karma and Surrender to God.
Be Fearless and do your duty with Dharma .
Dont fear death because death is certain when one is born
and birth is certain when one dies- so why worry?
A person who can give up ego, power, pride, lust ,anger
and taking favours, he only is qualified to think of
achieving Brahma.


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System of Education in Ancient India- Vedic
System and Buddhist System

Essentials of Indian Philosophy:
The law of Karma, Rebirth and Salvation (idea
of liberation)-Brahmacharya, Grihastha,
Baanprastha, and Moksha.
Eight Schools of Thoughts or Philosophy.
Common principlessimple living high
thinking-nonattachment to material things.
Difference with Buddhist philosophy.
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Ethics of Buddhism-the principle of Suffering-
existence, causes and cessation of sufferings.
Eightfold Noble Path or Madhyapantha
1.Sat Vakya - Right Speech
2.Sat Karma- Right Action (Right Conduct)
3.Sat Chinta- Right Thinking (Right Resolve)
4.Sat CheshtaRight Effort
5.Sat Smriti- Right Remembrance (Right Views)
6.Sat Jeevan- Right Livelihood
7.Samyag Drisht- Right Perception ( Mindfulness)
8.Smyag Samadhi- Right Meditation - ( Concentration).
Short-cut principles for ordinary people- dont steal,
dont lie, respect ladies and abjure violence.
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Ethics of Buddhist Economics
Sustainable Growth-Planting and nurturing of trees
and nature.
Utilization of local resources
Full employment
Dana-gifts-and charities to others-profit- sharing
(ethics of the wealthy and the business class)
Least expenditure on armies and promote
development through non-violence (ethics of
governance)
Following Dharma by the Rulers (ethics of rulers)

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Ethics of Jainism
1.Ahimsa (Abstinence from all injury)
2.Satyam (Abstinence from falsehood)
3.Asteyam (Abstinence from stealing)
4.Brahmacharyam (Abstinence from self-indulgence)
5.Aparigraha (Abstinence from all attachments)
Bondage of the soul: causes: anger, pride, infatuation
and greed.
Liberation of the soul: dissociation of the soul from
the matter.
Believes in the Theory of Karma and Rebirth but not
in God.

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Swami Vivekananda-Philosophy & Ethics
Dont forget that the poor, the down-trodden, and
the untouchables are your brothers & sisters.
You will reach God by playing football rather than
by reading the Gita.
You can not preach religion to people with empty
stomach-food and education come first before
anything else. Education, education, & education for
all- womens freedom, enlightenment and freedom
from superstition and blind faith.
Service to Humanity .Those who are serving jiva i.e
living beings are serving God.
Building of a strong nation and character through
education, economic and spiritual development.

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Philosophy of Mahatma Gandhi
Ahimsa- Non-violence ( imbibed Buddhism & Jainism &
Tolstoy)
Dharma- Moral Law (Gita)
Truth-Truth is God and God is Truth (Aristotle: know Thyself)
Communal Harmony (Indian tradition of tolerance and
harmony)
Equality of all human beings and Women (Western thoughts)
Harijans- up-liftment of the downtrodden (Vivekananda)
Khadi & Village development- dev. from grassroots
(innovation)
Trustee for Industries & Industrial Houses (innovation)
Sarvodaya & Community Development ( Marxism)

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Philosophy of Rishi Aurobindo-the Divine Man

Evolution of Consciousness. Divine Life on earth.
Money not despised-it is an instrument of Life
Divine- I do not regard business as something evil
or tainted..
Super-consciousness and mind-ascent of human
soul to Supreme Spirit.
India cannot perish ...among all the divisions of
mankind, it is to India that is reserved the highest
and most splendid destiny, the most essential to
the future of human race. It is she who must send
forth from herself the future religion of the entire
world, the eternal religion which is to harmonize
all religions, science and philosophies and make
mankind one soul. It is for this Shi Ramkrishna
came and Vivekananda preached.

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Philosophy of Rabindranath Tagore
Universalism against Nationalism;
Humanism; Humanizing Education System in
natural environment (Shantiniketan); Agricultural
development (Sriniketan);
The religion of Man;
Peace and Non-violence;
Unity of Mankind,
Freedom and Fearlessness;
Truthfulness; those who do injustice and those
who tolerate injustice are equally condemnable.
Where the mind is without fear and the head is
held high.
Tagore epitomized the entire Indian Culture of five
thousand years. A unique example of Total Quality
Management.

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Chapter 3. Theoretical Aspects of
Ethics
Cognitivism and Non-cognitivism
Consequentialism and Non-consequentialism
Deontological Theory of Emanuel Kant -goodwill
Utilitarianism- maximum good for the maximum number
-Jeremy Bentham
Egoism- Enlightened Egoism- Market Ethic (Adam
Smith), Protestant Ethic (work ethic-Max Weber), Liberty
Ethic (John Lock).
Rights Principles- Animal Rights, Human Rights,
Democratic Rights, Women Rights, Childrens Rights
Theory of Justice-based on principles of rights, fairness
and equality.
Distributive Justice. Retributive Justice. Compensatory
Justice.
Ethical Relativism- attitudes of races, religion & societies
Secular Ethics- truth, rationality and humanism.
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Ethics is all about distinguishing between:

*Good & bad or good and evil
*Right & wrong
*Morality & immorality
*Rationality & irrationality
*Justice & Injustice
*Reason & unreason or prejudice
*Fairness & unfairness
*Truth and untruth
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Cognitivism and Non-Cognitivism
Moral principles which can be identified or
recognized. (mainly religion based e.g. abortion,
drinking, cow slaughter or killing of animals for
meat or hunting, female infanticide, sati, interest
on deposits etc.)
The second view is Moral principles can never be
known because there is nothing in the world which
is absolute truth and which does not depend upon
or vary with time, place, situations and
circumstances.
What is moral today may be immoral tomorrow,
what immoral in one society may be moral in
another society depending on the cultural
differences. There is nothing in the world which is
unconditional except mans Free will and Good
Will.
Ethical Relativism
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Consequentialism & Non-Consequentialism
Consequentialism:
Utilitarianism-Jeremy Bentham
Egoism- Enlightened Self Interest Adam Smith
Non- Consequentialism:
Deontological Theory of Emmanuel Kant
(Duty and Goodwill).
Justice Principles Distributive Justice,
Retributive Justice, Compensatory Justice.
Rights Principles Human Rights, Women Rights,
Animal Rights, Environmental Rights, Children
Rights, Minority Rights, Education Rights,

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Human Values For Indian Managers
In spite of the fact that ancient India set
highest ethical, moral and spiritual standards,
there is no evidence of those in Corporate
governance.
While Japan has largely retained their own
cultural values in management
Indian managers are governed by western
values which are mainly materialistic.
Need for moral regeneration and adopt an
Indian Style of Management.
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.
Basic Questions in EconomicsWHAT,
HOW and FOR WHOManswers all
questions.
When there are plethora of Acts, Rules,
Guidelines and Regulatory Authorities to
regulate Business ,the question arises why
should there be a separate set of Business
Ethics?
The answer is Acts and Rules are not enough-
Business has to do much more than this and
that brings us to the question of Morality and
Moral Judgements.
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Nature of Business Ethics
Three Approaches to Study of Business Ethics:
Descriptive (describing practices, moral codes and
beliefs)
Prescriptive (attempt to formulate and defend basic
moral norms)
Conceptual study of ethics (analysing central ethical
terms such as right, good, justice, virtue-an attempt
to distinguish what is moral and what is immoral).
Four-part structure of Business Ethics:
1.Specification of Moral Judgement.
2.Moral Judgement and Moral Standards.
3.Logical Reasoning and Moral Standard.
5.Moral Judgement and Moral Responsibility.

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.
Various Aspects of Business Ethics.
1.General Business Ethics
This part of business ethics overlaps with the philosophy
of business, one of the aims of which is to determine the
fundamental purposes of a company. If a company's
main purpose is to maximize the returns to its
shareholders, then it should be seen as unethical for a
company to consider the interests and rights of anyone
else.
Corporate social responsibility or CSR: an umbrella
term under which the ethical rights and duties existing
between companies and society is debated.
Issues regarding the moral rights and duties between a
company and its shareholders: fiduciary responsibility,
stakeholder concept v. shareholder concept.

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.
Ethical issues concerning relations between
different companies: e.g. hostile take-overs,
industrial espionage.
Leadership issues: corporate governance;
Corporate Social Entrepreneurship
Political contributions made by corporations.
Law reform, such as the ethical debate over
introducing a crime of corporate manslaughter.
The misuse of corporate ethics policies as
marketing instruments.


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.
.
.
2. Ethics of Accounting and Financial I nformation
Creative accounting, earnings management,
misleading financial analysis.
Insider trading, securities fraud, bucket shops,
forex scams: concerns (criminal) manipulation of
the financial markets.
Executive compensation: concerns excessive
payments made to corporate CEO's and top
management.
Bribery, kickbacks, facilitation payments: while
these may be in the (short-term) interests of the
company and its shareholders, these practices may
be anti-competitive or offend against the values of
society.
Cases: accounting scandals, Enron, WorldCom,
Satyam
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.
. 3. Ethics of Human Resource Management
The ethics of human resource management (HRM)
covers those ethical issues arising around the
employer-employee relationship, such as the rights
and duties owed between employer and employee.

Discrimination issues include discrimination on
the bases of age (ageism), gender, race, religion,
disabilities, weight and attractiveness. See also:
affirmative action, sexual harassment.

Issues arising from the traditional view of
relationships between employers and employees,
also known as At-will employment.

Issues surrounding the representation of
employees and the democratization of the
workplace: union busting, strike breaking.
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.
. Issues affecting the privacy of the employee:
workplace surveillance, drug testing. See also:
privacy.
Issues affecting the privacy of the employer:
whistle-blowing.
Issues relating to the fairness of the employment
contract and the balance of power between
employer and employee: slavery, indentured
servitude, employment law.
Occupational safety and health.

All of the above are also related to the hiring and
firing of employees. An employee or future
employee can not be hired or fired based on race,
age, gender, religion, or any other discriminatory

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.
4. Ethics of Sales and Marketing
Marketing, which goes beyond the mere provision of
information about (and access to) a product, may
seek to manipulate our values and behavior. To
some extent society regards this as acceptable, but
where is the ethical line to be drawn? Marketing
ethics overlaps strongly with media ethics, because
marketing makes heavy use of media. However,
media ethics is a much larger topic and extends
outside business ethics.
Pricing: price fixing, price discrimination, price
skimming.
Anti-competitive practices: these include but go
beyond pricing tactics to cover issues such as
manipulation of loyalty and supply chains. See:
anti-competitive practices, antitrust law.
Specific marketing strategies: green wash, bait
and switch, shill, viral marketing, spam
(electronic), pyramid scheme, planned
obsolescence
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.
. Content of advertisements: attack ads, subliminal
messages, sex in advertising, products regarded as
immoral or harmful
Children and marketing: marketing in schools.
Black markets, grey markets.
See also: , disinformation, advertising techniques,
false advertising, advertising regulation
Cases: Benetton.

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.
5. Ethics of Production
This area of business ethics usually deals with the
duties of a company to ensure that products and
production processes do not cause harm. Some of
the more acute dilemmas in this area arise out of
the fact that there is usually a degree of danger in
any product or production process and it is
difficult to define a degree of permissibility, or the
degree of permissibility may depend on the
changing state of preventative technologies or
changing social perceptions of acceptable risk.
Defective, addictive and inherently dangerous
products and services (e.g. tobacco, alcohol,
weapons, motor vehicles, chemical manufacturing,
bungee jumping).

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.
Ethical relations between the company and the
environment: pollution, environmental ethics,
carbon emissions trading
Ethical problems arising out of new technologies:
genetically modified food, mobile phone radiation
and health.
Product testing ethics: animal rights and animal
testing, use of economically disadvantaged groups
(such as students) as test objects.
See also: product liability
Cases: Ford Pinto scandal, Bhopal disaster,
asbestos / asbestos and the law, Peanut
Corporation of America
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.
6. Ethics of I ntellectual Property, Knowledge and Skills
Knowledge and skills are valuable but not easily "own
able" as objects. Nor is it obvious who has the greater
rights to an idea: the company who trained the employee,
or the employee themselves? The country in which the
plant grew, or the company which discovered and
developed the plant's medicinal potential? As a result,
attempts to assert ownership and ethical disputes over
ownership arise.
Patent infringement, copyright infringement, trademark
infringement.
Misuse of the intellectual property systems to stifle
competition: patent misuse, copyright misuse, patent troll,
submarine patent.
Even the notion of intellectual property itself has been
criticized on ethical grounds: see intellectual property.
Employee raiding: the practice of attracting key employees
away from a competitor to take unfair advantage of the
knowledge or skills they may possess.
The practice of employing all the most talented people in a
specific field, regardless of need, in order to prevent any
competitors employing them.
Bioprospecting and biopiracy.
Business intelligence and
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.
7. I nternational Business Ethics and Ethics of
Economic Systems
International business ethics
While business ethics emerged as a field in the 1970s,
international business ethics did not emerge until the
late 1990s, looking back on the international
developments of that decade. Many new practical
issues arose out of the international context of
business. Theoretical issues such as cultural relativity
of ethical values receive more emphasis in this field.
Other, older issues can be grouped here as well.
Issues and subfields include:
The search for universal values as a basis for
international commercial behaviour.
Comparison of business ethical traditions in different
countries. Also on the basis of their respective GDP
and [Corruption rankings].
Comparison of business ethical traditions from
various religious perspectives.

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.
. Ethical issues arising out of international business
transactions; e.g. bioprospecting and biopiracy in the
pharmaceutical industry; the fair trade movement;
transfer pricing.
Issues such as globalization and cultural imperialism.
Varying global standards - e.g. the use of child labor.
The way in which multinationals take advantage of
international differences, such as outsourcing
production (e.g. clothes) and services (e.g. call
centres) to low-wage countries.
The permissibility of international commerce with
pariah states.
Foreign countries often use dumping as a competitive
threat, selling products at prices lower than their
normal value. This can lead to problems in domestic
markets. It becomes difficult for these markets to
compete with the pricing set by foreign markets. In
2009, the International Trade Commission has been
researching anti-dumping laws. Dumping is often
seen as an ethical issue, as larger companies are
taking advantage of other less economically advanced
companies.


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.
Ethics of Economic Systems
This vaguely defined area, perhaps not part of but
only related to business ethics, is where business
ethicists venture into the fields of political economy
and political philosophy, focusing on the rights and
wrongs of various systems for the distribution of
economic benefits. John Rawls and Robert Nozick
are both notable contributors.
I .Theoretical I ssues in Business Ethics
- Conflicting interests
Business ethics can be examined from various new
perspectives, including the perspective of the
employee, the commercial enterprise, and society as a
whole. Very often, situations arise in which there is
conflict between one or more of the parties, such that
serving the interest of one party is a detriment to the
other(s). For example, a particular outcome might be
good for the employee, whereas, it would be bad for
the company, society, or vice versa. Some ethicists
(e.g., Henry Sidgwick) see the principal role of ethics
as the harmonization and reconciliation of conflicting
interests.

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Unit 4 Features and Purpose of
Ethics
Ethics a Normative Science.
Postulates of Ethics-(a) Free will, (b) Reason, and (c)
Personality.
Motive or Intention-What is the Objective of Moral
Judgment?
The Scope of Ethics-Concerns all sciences and all
actions of individuals, politics and society.
The Need for Ethics
The Need to go beyond Ethics
Spirituality is not Denial of the World
Ethics and Religion
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Features of Values-Types of values-
Formulation of values
The Relevance of Human Values in Management
Elements of Indian Ethos
Secular Vs Spiritual Values in Management.
An independent rational morality not based on
religious faith or commandments.
Work Ethos.
Development of work culture
Factors responsible for poor work culture in an
organization.

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Unit 5. Importance of Ethics and
Moral standards
Importance of Ethics in Business-essential for long-term
success in business.
- Unethical behaviour will damage Public Image, erode
Goodwill( biggest Asset), affect efficiency and will
invite Govt. Intervention.
Unethical Behaviour from a Macro Perspective.
Bribery
Coercive Acts
Deceptive Information
Theft
Discrimination
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The Macro Perspective-Ethics and Trust
Trust in Supplier Relations
Trust in Customer Relations
Trust in Employee Relations
Moral Standards
Essential Elements of Social contract theory
Consequentialist Principles-decision ethical or
unethical will depend on consequences.
Egoism-individuals personal interest.
Utilitarianism-utility to individual & community.
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Unit 6. Model of Management in the Indian
Socio-political Environment
Role of Indian Ethos in Management : A Twenty-
First Century Perspective
Fragmentation of human consciousness accelerated
by science and technology is a prime cause of the
widespread fall in the level of human values reflected
in our lives.
Prospective scenario of the Future Organization:
Stress -second nature of Executives
Total Quality Control-zero-defect product, quality
conscious production, increased creativity, reduced
obesity, flattened hierarchy, customer satisfaction etc.




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Relevance of Indian Ethos to Future
Organizations
The Executive as a Yogi- Karma and Dharma
Imaan and Izzat.
The East and the West Plain Living and High
Thinking : a Study in Contrast
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Problems Relating to Stress in Corporate
Management and Indian Perspective
Age of Discontinuity (Peter Drucker)
Age of Uncertainty (J.K. Galbraith )
Age of Future Shock (Alvin Toffler )
Age of Anxiety ( Karl Albrecht )
STRESS :
Symptoms ,causes and Solutions
Environmental Factors & Life style
Indian Perspectives :Meditation, Yoga,
Mindfulness, Music, Self-introspection, Brain
stilling, family values and bonding.
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Unit 7 Corporations and Social
Responsibilities
The concept of Social Responsibility
Plethora of Acts, Laws, Rules and Regulations
exist, then why other responsibilities?
Howard Bowen ( Social Responsibilities of
Businessman )
K. R . Andrews (intelligent and objective
concern )
Keith Davis social responsibility begins
where the law ends.



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Need for Social Responsibilities
The iron Law of Responsibility
To fulfil long-run Self-interest
To establish a better Public Image
To avoid Government Regulation or Control
To avoid misuse of National resources and economic
power
To avoid Class conflicts
To convert resistance into Resources
To minimize Environmental damage.

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Responsibility of Business Towards Society
Four Categories of Responsibilities:
1.Resposibility Towards the Shareholders.
2.Responsibilities Towards their own Employees.
3.Responsibility Towards the Consumers and the
Government.
4.Responsibility Towards the Society in General
especially Environment.
Economic Objectives
Social Objectives ( profits can no longer be the
Sole objective of BusinessUrwick)
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.
Social Responsibility towards Government:
1.Be Law abiding Citizen.
2 .Pay Taxes and dues to Govt. honestly and promptly .
3.Not to corrupt Govt. Servants and the Democratic
processes for selfish ends.
4.Not purchase Political support by unfair means.
5 Not to produce and sell Sub-standard commodities
and services .
6.Not to resort to hoarding and unfair Trade practices.
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Place of Ethics and Values.
To Whom Are Organizations Socially Responsible?
Total Social Responsibilities
Economic Responsibilities
Legal Responsibilities
Ethical responsibilities
Discretionary Responsibilities
*Social Responsibility and Economic Performance.
*Milton Friedmans Thesis
*Ethics in Management.
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Corporate and Socio-Economic Conflict
The Social Audit *
The Sachar Committee Recommendations*
Corporate Social Reporting*
Corporate Social Objectives
Social Report in Practice :
-Environmental controls,
-Minority Employment
-Responsibility to personnel
-Community activities
-Product Improvement (Fortune 500 companies )
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Unit 8 .Ethics and Environment
Environmental Ethics-1 :
Bhopal Gas Tragedy (Union Carbide)
Chernobyl Nuclear power plant Tragedy (USSR)
Ecological Sustainability
Indira Gandhi on Environment. (development without
environmental destruction)
Environmental Ethics-II (John Locke) the Earth is
given to men to protect and comfort all beings.
A Brief Historical Sketch of Environmental Ethics *
Rachel Carson-Silent Spring. Peter Singer-Animal
Liberation. Ancient Indian Values. Ashokas Edicts.

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Unit 9. Ethics in Action Ethics of
Professions
A. Medical Profession.
I nternational Code Of Medical Ethics:
Duties of Doctors in General :THE HI PPOCRATI C
OATH. (Ancient Greece)
Duties of Doctors Towards the Sick:
Duties of Doctors Towards Each Other:
THE DECLARATI ON OF GENEVA (General
Assembly of World Medical Association,1948)
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B. Code Of Ethics For Engineers
Code of Ethics for Corporate Members
mandated by the Institution of
Engineers(India),1954 , 1997.
The Tenets of the Code Ethics: 11 Codes of
Conduct and 10 Instructions as Guidelines.
C. Professional Ethics for Chartered
Accountants:( Chartered Accountants
Act,1949.
The Council of the Institute has two booklets-
(i ) Code of Conduct and (ii) Professional
Ethics.

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Fundamental Principles for Chartered
Accountants
Integrity
Objectivity
Professional Competence and Due Care (e.g.
Satyam Scandal-PWC )
Confidentiality
Professional Behaviour. (Professional
Misconduct Defined by the CA Act)
Four Basic Needs to be met:
Credibility
Professionalism
Quality of Service and
Confidence
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D. Professional Ethics for Lawyers-Not
Codified-Fundamental Moral Values Only.
The Universal Moral Codes are wantonly
violated in this Profession
No Accountability( Ghaziabad Treasury
Scandal)
Justice Delayed, Justice Denied
Plight of Common Maneither you lose all
your money or lose your life before justice
comes.
Strict Codes for both inside and outside courts
needed for speedy justice.
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Modern Concept of Professional Behaviour
Responsibilities Towards Clients
Responsibilities Towards the Profession Itself
Responsibilities Towards Society
* Professional Ethics in Public and Private
Organizations.

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Unit 10. Ethics in Action-Ethics at Work
Place
What Are Work Ethos?
Work Culture- discipline, commitment, sense of
belonging, sense of pride
Unethical or Dysfunctional Behaviour in
Organizations: Employees & Employers
Lying
Free-riding
Employee Crime
White Collar Crime
Embezzlement and Fraud
Sexual Harassment
Bribery
Whistle Blowing

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Operational Systems for improvement of
work culture
Job Enrichment- Herzbergs two-factor
theoryHygienes and Motivators
Job Rotation
Quality Circles*
Workers Participation
Organizational Development ( OD )
Labour Welfare
Human Engineering-to fit man into machine.



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Modern Concept of Professional Behaviour
Responsibilities Towards Clients
Responsibilities Towards the Profession Itself
Responsibilities Towards Society
* Professional Ethics in Public and Private
Organizations.
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Unit 11. Ethics and Employees
Decision-Making and Morality
Moral Approbation
Organizational Culture
Organizational Climate
Organizational Goals
Decision Processes
Total Benefit Test
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Embedding Ethics in Organizational Culture
*Decision Support Model .*Ethical Models
Developing Organizational Values :
Selection
Promotion
Transfer
Termination
Prevent other unethical practices:
1.Sexual harassment, 2. Unfair labour practices,
3Unsafe work places, bad conditions and long
working hours ,4.No redresal of ILO
grievances ,and 5. Non -implementation of ILO
conventions.
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Qualities of a Personnel Manager
1. Training and learning opportunities
2. Growth opportunities
3.Accountability along with power for decision
making
4. Openness
5. Nurturing innovation and allowing
paticipation
6 Employee welfare
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An Ethical HRD Manager
A Personnel Manager must be a good manager
and to be a good manager,one has to a good
man-big-hearted, genuine concern for others,
commands respect,big-minded and
development of people below manager.
HR men should provide proper Leadership.
You shall others as equals
You should show the ability to forgive
You shall love your fellowmen and women
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Unit 12. Ethics of Advertising
Critics of Advertising argue:
Ad is unethical, is inherently a social evil.
It induces people to buy things they dont need
or cant afford. Increases expectations.
Propagates and perpetuates Capitalistic value
system.
It creates undue pressure on the Consumers
Big firms can afford it but small producers
cant
Huge money involved should be better spent
on improving the quality of products
*The critics blame the tool and not the user like
blaming weapons.
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Impact of Advertisement : To Influence
Advertisements can be categorized into 7 groups:
1.Informative-to create awareness of the presence of
a company or a product- Govt. Advt; launching of
new products.
2.Neutral and Aesthetic. (specially with children,
dogs)
3.Message Bearing (Tata Tea)
4.Competitive and Comparative( cars)
5..Aggressive and Offensive
6.Dangerous Stunts
7.Deceptive
*Deception is the main problem it is immoral &
unethical
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Regulation of Advertising
Legislation-Govt. Control
Voluntary-Self-Regulatory Control-Ad
Council as Watchdog
Media Control
Consumer Fora
Public Control
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UNIT 13 Ethics in Business and
Investment
Negative and Positive Forms of Ethical
Investment.
Negative Criteria in Ethical Investment
Decisions
Positive Criteria Influencing Ethical
Investment Decisions
Animal Rights-A Moral Concept ?-The Big
Debate- International Movement for
Prevention of Cruelty to Animals.
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Other Leading Ethical Investment
Target Industries
Alcoholic Beverages Production and
Distribution.
International Narcotics Trade
International Arms Trade
Use of Additives in Food Production.
Different Value Systems in Different Cultures
Kants Kingdom of Ends
Other Possible Approaches
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Unit 14 Ethics in SCI-TECH and
LAW
*Bio-Ethics-Manufacture of Medicines, Medical
Treatments (sex determination, fertility etc.)
*Bio-Technology-Limits ?
*Genetic Engineering Moral and Safety Issues
*Human Genome Project
*Stem Cell Research.