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Entrepreneurship and Good Governance

Unit 3

Business Ethics

Prof K.V.S.RAJU

Morals are a set of beliefs or guild lines that people follow based on their culture or society.
Morals are almost always different for individuals because morals are based on an individual's
interpretation of what's good. A dictionary meaning of Morals concerns right and wrong, good
and bad, the rules that ought to be followed.

Values are Important beliefs and desires that shape attitudes and motivate our actions.Values as
socially or culturally accepted standards or rules of behavior . Examples are

• Integrity

• Responsibility

• Respect

• Fairness

• Excellence

Ethics are A set moral principles or values or guiding philosophy. Moral principles of duty and
virtue that prescribe how we should behave; the foundation of our internal control.

Why ethics are important for a manager? Managers has to deal with

 Changing norms

 Mixed messages

 Ambiguity

 Competing pressures

Ethics help us in

• Reaching the right direction

• Study of human morality

• Determining values in human conduct

• Deciding the right thing to do- based on a set of norms

resolving moral issues. Whether we are willing to do the right thing even if it is likely to cost more than what we want to pay? What are business ethics? • Application of general ethical concepts to the unique situations confronted in business • It asks what is right or wrong behavior in business and what principles or rules can be used as guidance in business decisions Characteristics • Tell people what they ought to do • Set of principles or rules • Developed by moral philosophers over generations • Ethics . and ideals • Ethics . Golden Rule . and justifying moral judgments Why should managers study ethics? • Make you more ethical? • Help in trying to do the right thing • Used to distinguish ehtical from non-ethical behavior Sample tests for ethics • Benefit Cost Test .set of justified moral principles of obligation.Are you willing to allow everyone to practice the proposed action or do you want to be a special case? • Light of Day Test.Ethics is not about words but actions.synonyms for “morally correct” or justified . It is what we do. What would be your reaction if the action were brought out into the open for public scrutiny? • Do Unto Others Test.particular beliefs or attitudes concerning morality • Ethics . It is not about what we say or intend nor is it simply a written code or a framed code.If you would like others to do the same to you - passes the test .Do the benefits exceed the costs to whomsoever they accrue? • Categorical Imperative.area of study or inquiry – an activity of understanding moral values. rights.

Seek out others views. Discuss the 5 tests with them.passes the test Ethical dilemmas in business • Conflict of Interest. Private Interest Conflicts with Corporate Business Interest Conflicts with Public How do you justify ethics in Business? • Money matters • Corporate matters • Ethics and profit . Have two interests . • Ventilation Test. If others feel it is OK .cannot purse one without having negative impact on other • Two Types.

profits. • Ethics and opportunities • 3 beneficiary views on ethics • guidelines Ethics and economics. practices . • Opposite ends • Profit and market share • Reasonable returns • Long-term reputation • Desire to contribute to economy • Fair trading • Evidence of ethical commitment • Food products-hygiene • Competitive advantage vs laws Are the following ethical? • Ethical investment • Damage to Environment • Cruelty to animals • Arms manufacturing • Alcohol • Gambling Advantages of following ethics • Developing managers and employees as committed functioning ethical individuals • Fostering a corporate environment • Implementation of e-policies.and opportunities.

• Goodwill • Quality of life • Ease of raising VC • Improves morale • Recruit/retain good talent • Reduces internal conflict • Reduced penalities Ethical benefits can be broadly classified in to • In house • In market • In community Why do we behave unethically? • Ethics should reflect social values and be responsible to them What is corporate climate? How do you measure? What are the Advantages? • Medical check-up • Org process • Individual roles • Employee matters • Goods/services • Community involvement • Environment • IPR • Org plans • Fairness in accounting Other political issues .

If there is an Explicit code of conduct based on the Value system we can live ethically. What is corporate climate audit? Why is it necessary? ……………………………………………………………………………………………………… ……………………………………………………………………………………………………… ……………………………………………………………………………………………………… ……………………………………………………………………………………………………… ……………………………………………………………………………………………………… Naturalist fallacy • Supposed error of proceeding from factual statements • Assertions about what it is • To value statements about what ought to be • What ought to be vs what is done • Ex: drug dealers . • Politics and business • Advertising • Promises • Code for public servants • Code of conduct vs code of ethics • Application of codes outside work place Ethics and morals when we are Knowing doing feeling what is right as per Standards held by the community.