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ACHARYA INSTITUTE OF GRADUATE STUDIES SOLADEVANHALLI, BANGALORE LECTURE NOTES SUBJECT: BUSINESS ETHICS & CORPORATE GOVERNACE CHAPTER

NUMBER-I CHAPTER NAME: - ETHICAL THEORIES & CORPORATE SOCIAL RESPONSIBILTY PREPARED BY: MR.SHAIKH JUNED SAOUD

I. COGNITIVISM & NON-COGNITIVISM 1. It is the first and most profound division is between the claim that it is possible to know moral right from wrong and the denial of the claim. 2. The claim and counter claim about that we can and cannot know, that position which declares we can know is called cognitivism. There are objective moral truths which can be known, just as we know other truths about other world is cognitivism. 3. Under Non-cognitivism object assessment of moral belief is not possible. It is subjective in nature. In general, it can be claimed that there are two major kinds of ethical theories: teleological and deontological ethical theories. Here we will discuss these theories Teleological theories are interested in consequences, while deontological theories are interested in duty. Teleological Theories- Utilitarianism The most common teleological theories of ethics are egoism and utilitarianism. Both of them focus on the consequences of an action. However, there is a difference between utilitarianism and egoism. While the consequences to ones self define actions as ethical or unethical in egoism, in utilitarianism the consequences to others define actions as ethical or not. Utilitarianism can be summed up by the phrase, the greatest good for the greatest number. According to utilitarianism, actions should be evaluated by their consequences. The founder of classical utilitarianism is Jeremy Bentham. Benthams moral theory is based on his understanding of human nature. Human beings always try to avoid pains and seek pleasures. A moral theory that dictates that people must choose the action or follow the rule that provides the greatest good to society. This does not mean the greatest good for the greatest number of people. Has been criticized because it is difficult to estimate the good that will result from different actions.

Deontological Theories- Kantian Ethics A moral theory that says people owe moral duties that are based on universal rules. Based on the premise that people can use reasoning to reach ethical decisions. This theory would have people behave according to the categorical imperative: Do unto others as you would have them do unto you. Deontologys universal rules are based on two important principles: 1. Consistency all cases are treated alike with no exceptions. 2. Reversibility the actor must abide by the rule he or she uses to judge the morality of someone elses conduct. Thus, if you are going to make an exception for yourself, that exception becomes a universal rule that applies to all others. A criticism of this theory is that it is hard to reach a consensus as to what the universal rules should be. II. CONSEQUENTIALISM VERSUS NON-CONSEQENTIALISM 1. Consequentialism: - Here we look to the results of actions to determine the truth or falsity of moral judgments about them. The actions resulting in benefit on balance then it is considered a good action and so we are right to do it. The test of whether action is right or wrong or whether it is good or bad in Consequentialism is in the sense of resulting in benefit or harm. 2. Non-Consequentialism: - In this case , there is no immediate appeal to beneficial or harmful consequences to decide good or bad. It is the right or wrong that determines good or bad. Calculations as to likely consequences of the action need play no part in that conception. UTILITARIANISM- RELIGIOUS & ETHICS Utilitarianism argues that an action is right if it creates happiness and wrong if it creates unhappiness. This is the greatest happiness of the greatest number, the motivation of humans is pleasure and little pain There are two forms of utilitarianism proposed by Bentham and Mill. However, whereas Benthams theory was greatest good for the greatest number and was based on quantity, Mill believed that the pleasure should be based on quality. This eliminated the concerns raised over Benthams theory about sadistic guards. Mill used rule utilitarianism. When it comes to the issue of the use of embryos in medical research, Mill would defend their use, as the mother would have made a free informed choice to donate the embryo. He believed that individual liberty was important as long as it didnt cause others harm. He believed that children and savages did not count when calculating consequences.

Benthams Utilitarianism is not compatible with a religious approach to ethics. Assess this view. In support Some decisions may contradict the moral code of a named religion. Using people as a means to an end (to increase the happiness of the majority) may deny them their God-given rights. Benthams utilitarianism gives no guidelines on how happiness-making resources should be distributed, but within a religion this may be essential. Suffering / pain may not be wholly bad. Against The sacrifice of the one for the benefit of many may also be consistent with religious teaching. Situation Ethics can be presented as a religious form of utilitarianism. KANTIANISM VS UTILITARIANISM Serial. Details No 1. Explicit and direct appeal to consequences in determining right or wrong 2. Motives for the action 3. Good in themselves Kantianism Absent Yes Utilitarianism

Sole Importance Yes

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7. 8. 9. 10. 11.

Matter only in so far as they are conductive to performing actions maximize utility Consequentialist flexibility and non-consequentialist nonflexibility Permit the sacrificing of individuals or minorities to collective self interest Common good must have priority over everything else Disallowed all lying Theory Ethics of Formulations on

No

Incidental Only as a means to the end of maximizing utility Yes

Strong

Weak

No

Yes

Yes Yes NonConsequentialism Duty Sense of Duty, Universalizing

--Consequentialism Welfare Utility, maximize happiness, more good

Ethics & Social Responsibility: Business ethics can be defined as the principles and standards that determine acceptable conduct in business organizations. The acceptability of behavior in business is determined by customers, competitors, government regulators, interest groups, and the public, as well as each individuals personal moral principles and values. Social responsibility as a businesss obligation to maximize its positive impact and minimize its negative impact on society. Although many people use the terms social responsibility and ethics interchangeably, they do not mean the same thing. Business ethics relates to an individuals or a work groups decisions that society evaluates as right or wrong, whereas social responsibility is a broader concept that concerns the impact of the entire businesss activities on society. Changing expectations of social responsibility & Diagnostic Model of social responsiveness: - I have given in the class. Please refer it.

Religion and business ethics: Religion is a strong base for the believersvalues and ethics for all aspects of their lives. It would be nearly impossible for a human being to separate their beliefs from their business life as it something that most people do not have to think about in order to affect their behavior. Culture is the characteristics, beliefs and values shared by members of a group of people that may be determined by age, social status, religion, or many others factors. Managers may try to form a shared sense of features within their workplace but it appears to be the indigenous culture that has the most significant impact on employee relations but more specifically the dominant religion in a country has the most significant affect (Capaldi 381).